The Impact of Bitcoin’s Crash on Litecoin
Litecoin, the altcoin famously labelled as “Silver to Bitcoin’s Gold,” is treading to an unfavorable month as it continues to lower with each passing day. This comes as bitcoin crashed to $26,000 on August 17. As a consequence, Litecoin’s price dipped, too, resulting in over $17 million worth of long liquidations in a day.
With Litecoin trading at $65 after enduring a bearish week, the most considerable blow was dealt within the last 24 hours. During the intra-day trading hours, the altcoin almost dove to $60 before bouncing back. This decline demonstrates a new low for the year and is even close to hitting its lows in December 2022.
Litecoin’s Bitcoin Association Backfires
Litecoin’s price predicament is particularly attributed to its close relationship with Bitcoin. As the biggest cryptocurrency, Litecoin follows Bitcoin’s cues irregardless of Litecoin’s own ecosystem’s performance. This association, however, is adversely affecting Litecoin’s price as Bitcoin crashed due to Elon Musk’s SpaceX selling all its Bitcoin holdings, stirring Fear, Uncertainty, and Doubt (FUD) around it.
The consequence of Bitcoin’s crash resulted in a large-scale liquidation. Approximately over $850 million worth of long liquidations were reported within the crypto market. Whilst bitcoin investors encountered the largest hit, Litecoin traders also experienced over $17 million in similar liquidations, marking the most long liquidations noticed by its traders in over three months.
Slipping Further? The Critical Support Line at $63
Considering this scenario of increased liquidations and the potential speculation for further decline, there’s a possibility that Litecoin’s price might continue descending on the charts and even breach the December 2022 lows of $63. This value stands as the essential support line at present.
As for the participation from Litecoin investors, a significant decline has been noticed recently. At this point, some 263k addresses are actively conducting transactions on LTC’s network. Regardless, a drop in active engagement has also been observed this month, indicating a three-month low.
A Silver Lining for Litecoin?
The state of Litecoin’s investor participation is pivotal in deciding its recovery. If it sees higher participation going forward, Litecoin’s price might bounce back above $69. This could support a recovery to $77 and beyond.
Please feel free to share your thoughts on Litecoin’s current predicament and the influence that bitcoin’s performance has on it. We would love to hear from you below.
