Litecoin trades above key level, but is a correction looming?

• Long-term holders’ confidence in Litecoin has increased over the past months.
• A metric suggested that LTC was overvalued, indicating a price correction. 

As the market turned bullish, Litecoin [LTC] managed to trade above a crucial level. Will this development allow LTC to begin its journey towards $100? Let’s have a closer look at the coin’s state to find out whether that’s possible.

Litecoin trades above a key level

Litecoin bulls were having a good time in the market as the coin’s price increased by over 3% last week. The bullish trend continued in the last 24 hours because the coin witnessed yet another 3% surge in its value.

At the time of writing, LTC was trading at $65.58 with a market capitalization of over $4.9 billion, making it the 19th largest crypto.

Despite the price increase, only 22% of Litecoin investors were in profit, as per IntoTheBlock. However, the trend might change as the coin managed to test a crucial support level.

Crypto Tony, a popular crypto analyst, recently posted a tweet revealing that LTC’s successful test of the support could result in a price rebound. In fact, a price rebound could allow LTC to move towards the resistance of $100 in the coming days or weeks.

Source: X

Glassnode’s data also pointed out a similar possibility. As per the Pi Cycle Top indicator, the possible LTC market top was near $148. This suggested that it won’t be a long shot to expect LTC climbing towards $100 in the coming days.

Source: Glassnode

Is LTC set for a breakout?

AMBCrypto’s analysis found that long term holders (investors holding LTC for more than 1-year) confidence in the coin increased over the last few months as the graph increased.

To be precise, more than 78% of LTC holders were long-term investors. 

Source: IntoTheBlock

Our analysis of Santiment’s data revealed that LTC’s MVRV ratio increased significantly. Additionally, its weighted sentiment also followed a similar route, meaning that bullish sentiment around the coin was dominant in the market.

However, not everything looked favorable. 

Source: Santiment

For example, Litecoin’s velocity dropped. This meant that LTC was used less often in transactions within a set timeframe. Moreover, its NVT ratio registered an uptick.

Whenever the metric rises, it indicates that an asset is overvalued, hinting at a price correction. 

Source: Glassnode

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Therefore, AMBCrypto checked Litecoin’s daily chart to better understand which way it was headed. As per our analysis, the Chaikin Money Flow (CMF) registered a sharp recline, indicating a price correction soon.

However, the Money Flow Index (MFI) turned in buyers’ favor as it moved up, giving hope for a continued price increase. 

Source: TradingView