An observation of Litecoin’s charts for the past 48 hours reveals that the cryptocurrency dropped below $43. In fact, the silver counterpart to Bitcoin registered a fall of 10.54 percent on 10 April, with its price holding firm just above the support at $40.
Litecoin 1-day chart
Source: LTC/USD on Trading View
Since the collective market collapse on 13 Match, Litecoin, with the rest of the crypto-industry, has been able to undergo a steady recovery, a recovery which saw the altcoin record a period of strong consolidation above the $40 mark.
However, over the last two days, Litecoin has seen some degree of correction. The token registered a dip of 10.54 percent, a drop that took its valuation from $46.32 to $40.68. From a market perspective, such a correction is deemed healthy as the price did not break out of the ascending channel. In fact, the formation of the pattern following 14 March indicated that another pullback may be on the cards, but the crypto-asset will not fall below the $40 mark.
According to the VPVR indicator, trading volume around the $39-$40 level has been strong, indicating the strength of the support. The Point-of-Control has also been at the same place, something that suggested that buyers have necessarily strengthened the local bottom at this range.
One possible scenario after a bearish pullback should see Litecoin surge above the weak resistance at $43, while also re-testing the levels at $46.82 and $48.72 over the next couple of weeks.
In fact, the RSI also suggested that buying pressure has remained relatively strong on the charts over the past few weeks.
Source: Coinmetrics
However, according to CoinMetrics, Litecoin’s NVT has drastically fallen since the start of 2020, and the same pictured a recent decline as well.
A higher NVT usually suggests that the network valuation of the token is outperforming the value being transmitted on the network. Whenever NVT reaches a higher rating, it usually indicates that investors are valuing the asset from the perspective of long-term growth.
Litecoin’s declining NVT ratio isn’t positive from a market perspective and it may play an important role going forward.
Conclusion
Although a necessary bottom may have been attained in the charts, Litecoin’s NVT ratio pictured a major red flag. With Bitcoin’s correlation with major altcoins still higher than usual, Litecoin’s dependency on Bitcoin may remain high until the global economic crisis mellows down.