Litecoin Price News: LTC Rose by 66% The Last Time This Happened

Litecoin (LTC) is once again approaching the $50 level after briefly bouncing off this level in the past couple of weeks.

Trading volumes remain a bit high as selling pressure persists. At $280 million, they account for 7% of the token’s circulating market cap.

Crypto Fear and Greed Index – Source: CoinMarketCap

Market participants remain heavily pessimistic about cryptos as reflected by the Fear and Greed Index. This sentiment gauge recently dipped to its lowest level on record at 5, confirming that investors are in panic mode.

Second-tier altcoins like LTC, SUI, and AVAX have all retreated strongly since the year started. However, on-chain metrics have begun to flash contrarian “buy” signals as negative sentiment has reached extreme levels.

MVRV Ratio Printed Its Lowest Negative Reading in Three Years

Santiment data shows that one metric known as the Market Cap to Realized Cap (MVRV) Ratio recently dropped to its lowest level since 2022.

Litecoin MVRV Ratio (365 days) – Source: Santiment

This on-chain metric is used to predict local and cycle bottoms and tops, and changes in the prevailing trend by tracking the relationship between the current price of a token and the average price at which each token was acquired.

If the market price is above that average cost basis, the MVRV is positive, meaning that a significant portion of investors should be in profit. The opposite is true if the MVRV Ratio is negative.

Right now, this metric sits at -37%. This low print could signal that we are near a cycle or local bottom, as holders have little incentive to keep selling, as they would lose too much.

Back in 2022, LTC spent around 5 months consolidating between $50 and $60 and then began to rally toward $100.

This pattern has repeated at least three times over the past three years, delivering an average gain of 66% once the price breaks out of the consolidation pattern.

Consolidation Seems to Have Started – Can LTC Jump Back?

The daily chart shows that some sort of consolidation has started between $50 and $55 for the time being, which could, alongside the MVRV Ratio’s behavior, be an early signal that LTC is ready for a relief rally.

LTC/USD Daily Chart – Source: TradingView

Based on the signal’s historical performance, the baseline scenario, if the token bounces off this support area and breaks past $60, envisions a move to at least $100 in the near term.

That said, buying interest at this level was not strong enough to push LTC beyond $60 the last time. Hence, there is also a chance that LTC could move to lower ground – possibly eyeing the $40 level as the next stop in case the downtrend continues.

This means a 20% downside risk, and would push LTC to its lowest level since June 2022.

Short Sellers Have the Upper Hand if LTC Drops Below $50

Heading to the 4-hour chart, the selling pressure was quite strong as LTC dropped below $50. However, the market got ahead of itself, and the price quickly recovered.

LTC/USD 4H Chart – Source: TradingView

Two consecutive sell signals confirm a bearish outlook for the token and increase the odds of a breakout below this support. Measured since the first sell signal popped up, this lower time frame signal has yielded a 13% return for short-sellers.

Ideally, bears would wait for a break below $50 to open a position, setting their stop price right above this psychologically and technically relevant threshold. Using the $40 level as the take-profit target, this trade offers a 3x risk-to-reward ratio.