Litecoin (LTC) is up more than 25% since dipping below US$50 on August 14th, but down 83% from the record high on December 19th. The LTC market cap is the 7th largest among coins tracked by bravenewcoin.com, at US$3.64 billion, with exchange-traded volume of US$281 million in the past 24 hours. LTC has outperformed most of the coins above a US$100 million market cap over the past week.
The first ever Litecoin summit is scheduled for September 14th and 15th in San Francisco. The creator of Litecoin, Charlie Lee, will be giving a keynote talk. Lee famously sold all of his LTC in December and January due to a “conflict of interest,” and recently told CNBC that he would not buy any back at this time or at all. Lee also recommended dollar cost averaging, an investment technique of buying a fixed dollar amount of a particular investment on a regular schedule regardless of the current price, as well as focusing on adoption and the underlying technology.
In the meantime, Zulu Republic recently announced lite.im which will enable LTC transactions through SMS and Telegram messaging. The new project is aimed at expanding cryptocurrency access, and promises to bring Litecoin services to anyone with even the most basic mobile phone, regardless of whether or not they have access to the internet. lite.im users will be able to interact with the Litecoin blockchain, sending and receiving funds from anywhere in the world where a cellular signal can be found.
In the U.S., thanks to a financial disclosure report recently released, U.S. Representative Tulsi Gabbard was buying around both Litecoin and Ethereum in December, around record highs. In May, Congressman Bob Goodlatte was the first congress member to disclose holding cryptocurrencies, to the tune of US$80,000. The U.S. Office of Government Ethics (OGE) gave guidance on disclosing virtual currency holdings in June. U.S. Congress members are required to report any financial transaction of stocks, bond, commodities futures, and other securities within 45 days and continue to do so until six years after holding office.
In regards to the LTC development roadmap, the litecoincore.org website is currently down and the LitecoinCore twitter account has not tweeted since May. The Litecoin GitHub account has only had three commits in the past 90 days.
On the network side, LTC has far fewer daily active addresses (DAAs) than either Bitcoin or Ethereum. DAAs have decreased dramatically across all cryptocurrencies over the past six months. An uptick in active addresses, which can be used as an adoption metric, should be seen as a leading indicator of bullish price action.
The number of transactions per day has vacillated between 20,000-30,000 since June. Average transaction fees have continued to decline since May, are now at their lowest levels in over a year, and are cheaper than Bitcoin, Ethereum, Dash, and Monero.
LTC uses SegWit enabled addresses to both decrease individual transaction size and cost, as well as increase maximum block size. The SegWit protocol upgrade also enables transactions to be used on the Lightning Network, a bi-directional, off-chain, hub-and-spoke payment channel.
The LTC 30-day Kalichkin network value to transactions (NVT) ratio has been increasing throughout the year, and is now sitting near record highs. A rising NVT suggests decreased economic activity or utility over time. While this ratio can be used to assess a network, it’s difficult to compare coins which use different transaction types. An inflection point or downtrend in NVT should be seen as a bullish indicator for price.
Difficulty and hashrate have decreased since record highs in May and June, which is most likely fueled by a decrease in mining profitability. Mining profitability has increased slightly from a low on August 11th. Factors that influence mining profitability include; price, block times, difficulty, block reward, and transaction fees. Of the 84 million LTC to ever exist, 69.20% has been mined. The next block reward halving is set for August 2019.
Exchange traded volume during the past 24 hours has been predominantly led by the Bitcoin (BTC), Tether (USDT), and U.S. Dollar (USD) pairs. The majority of trading has occurred on OKEX, which recently announced LTC/BTC and LTC/ETH trading pairs. Trading in the Asian fiat pairs, the Chinese Yuan (CNY), Korean Won (KRW), and Japanese Yen (JPY), is minimal.
Litecoin is showing signs of a potentially strong local bottom with a recent capitulation wick on the daily chart. As a trend flattens out and consolidates, analysts look for signs of trend continuation or reversal. The status of an existing or emerging trend can be determined using exponential moving averages (EMAs), Pitchforks, Volume, Ichimoku Cloud, chart patterns, and divergences. Further background information on the technical indicators discussed below can be found here.
Bitfinex open interest on the LTC/USD pair (top) is net long, with longs recently increasing and shorts decreasing. Open interest on the LTC/BTC pair (middle) is heavily net short, with a recent reduction in shorts with longs adding. Price has fallen 50% since the bearish 50/200EMA death cross on May 22nd and remains far below the 200EMA. Although a bullish entry would not be warranted until a bullish 50/200EMA golden cross, a price move towards the 200EMA is possible simply due to mean reversion.
There is also a long standing bearish Pitchfork (PF) with anchor points in December, March, and May, established after the all time high in December. Price recently retested the median line (ML), a high volume zone historically based on the Volume Profile, and held as support. The PF remains valid until a candle closes above the top diagonal resistance line.
Turning to the Ichimoku Cloud, four metrics are used to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.
The status of the current Cloud metrics on the daily time frame with singled settings (10/30/60/30) for quicker signals are bearish; price is below Cloud, Cloud is bearish, TK cross is bearish, and Lagging Span is below Cloud and below price. A traditional long entry will not trigger until price is above the Cloud. A long flat Kumo at US$73 will act as a magnet for price if the current lows hold.
The status of the Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals are also bearish; price is below Cloud, the Cloud is bearish, the TK cross is bearish, and the Lagging Span is below the Cloud and below price. Again, a traditional long entry will not trigger until price is above the Cloud.
The position of the TK lines show a growing C-Clamp, which can be thought of as a bullish divergence, and suggests oversold conditions. If price does not make lower lows, a target of ~US$72 at the Kijun is likely. There is also a long flat Kumo at US$117 which will also act as a magnet for price. The most aggressive entry for this long trade would occur after a candle closes within the Cloud and a bullish TK cross.
On the four hour chart, price has formed a bullish reversal double bottom chart pattern known as the Adam and Eve. The hallmarks of this pattern include a V and U structure which occurs in the setting of a descending volume profile. The pattern has essentially completed, and has a 1.618 fib extension and a measured move of US$69 and US$73.50 respectively.
The daily chart for the LTC/BTC chart shows a strong bearish trend according to the Cloud with repeated Tenkan rejections (blue), an indicator of ultra bearish sentiment. There is also a growing multi-month bullish RSI divergence suggesting a waning in the intensity of bearish momentum. Both the TK C-clamp and the long flat Kumo give high probability reversal targets.
The Litecoin network continues to run smoothly and cheaply, despite being less flashy than it’s competition. The project has suffered from a lack of planned development over the past few months, which shows in the lack of GitHub commits, tweets, and website. The Litecoin summit should serve as much needed lifeblood to rally the community towards new development and adoption goals. LTC led the charge towards SegWit adoption before Bitcoin, essentially acting as a live testnet. Going forward, LTC may very well implement other pending Bitcoin developments before the BTC network.
Technicals suggest the risk/reward is favorable for a long position, despite the existing bear trend. Mean reversions to the daily Kijun on the doubled Cloud at US$72 and daily 200EMA at US$100 are likely in the near term. The completed Adam and Eve also gives credence to the bullish reversal to ~US$70. The LTC/BTC pair has been hammered mercilessly since May, as LTC/USD has fallen substantially and BTC/USD has held its lows. The bullish divergence and TK C-clamp are highly suggestive of LTC regaining ground in the ratio to 0.01 sats.