Litecoin (LTC) price sell-off to continue until this happens

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Litecoin price is in a consolidation phase as investors await the next major catalyst. It is trading at $51.87, up nearly 28 per cent from its June low. Its market cap currently stands at $3.67 billion, making it the 21st largest cryptocurrency in the world. At its peak, LTC was one of the largest coins globally.

Why has LTC crashed?

Litecoin is a major cryptocurrency that was created to address the challenges of bitcoin as a medium of exchange. For example, Litecoin has a higher supply limit than BTC. It is also very fast and its transactions are very cheap.

LTC is closely related to Bitcoin. Therefore, the factors that pushed BTC to $20,000 are the same ones that drove Litecoin down.

First, there is the issue of the Federal Reserve. To protect the US economy from the pandemic, the Fed decided to lower interest rates to record lows. It also implemented quantitative easing (QE), which involved printing trillions of dollars in cash.

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As a result, these actions pushed bond yields to record lows and riskier assets to record highs. Stocks and cryptocurrencies boomed. Now, the Fed is doing the opposite. The bank has started increasing interest rates and implementing quantitative tightening (QT). Therefore, investors are abandoning riskier assets such as Litecoin and Bitcoin.

Second, on-chain data shows that activity in the Litecoin ecosystem has declined sharply over the past few months. This means that very few people are holding and using Litecoin for transactions.

Lastly, recent events in the cryptocurrency industry have led to weak demand for LTC. Some of the most significant developments are the collapse of Voyager Digital, Celsius, Wald and BlockFi. Most of the investors have opted out of their crypto investments as they avoid getting stuck in such a situation.

Litecoin price prediction

The daily chart shows that LTC price has been in a strong bearish trend over the past few months. During this sell-off, the coin managed to cross several important support levels like $92.11 and $100. It is below the 25-day and 50-day moving averages, while the relative strength index (RSI) is at a neutral point at 50.

Therefore, Litecoin will continue its downtrend as long as it is below the two moving averages. Until that happens, LTC will retest the $40 support level.

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