A multiyear analysis of Litecoin futures open interest reveals a concerning trend that has historically impacted the LTC price. With the upcoming halving event, traders are questioning if the scarcity effect will be enough to sustain the LTC price above $90.
Litecoin’s price has declined by 19% in the last 18 days, but it has shown a positive 31% performance this year. However, there is an alarming statistic coming from the derivatives market that indicates a sharp correction may be underway.
Historical data shows that each time Litecoin futures open interest dropped below $500 million, it caused price drops of 38% or higher. This matches the current scenario.
The recent surge in Litecoin futures’ aggregate open interest indicates increased demand for leveraged futures contracts. However, the concerning aspect is that Litecoin’s open interest remains above the $500 million mark, suggesting a risk of a sharp correction.
Looking back at previous instances, when Litecoin’s open interest dropped below $500 million, its price faced drastic corrections. This happened in November 2021, February 2021, and May 2021.
If Litecoin’s open interest declines from the current $500 million level, history suggests a potential 30% drawdown in price.
In summary:
– Litecoin’s upcoming halving event raises questions about the sustainability of its price above $90.
– Litecoin’s price has declined recently, but it has shown positive performance this year.
– Historical data shows that when Litecoin futures open interest drops below $500 million, it leads to significant price drops.
– The recent surge in Litecoin futures’ open interest suggests increased demand, but the risk of a sharp correction remains.
– Previous instances of Litecoin’s open interest dropping below $500 million have resulted in drastic corrections in price.
– If Litecoin’s open interest declines from the current level, there is a potential for a 30% drawdown in price.
