Litecoin [LTC] is currently a hot topic in the cryptocurrency community as the halving event draws near. Anticipation is high for this event, as it is considered a highly bullish occurrence. However, various indicators are pointing toward the possibility of a significant correction in the LTC network.
Prominent analyst Ali Martinez has put forth a different perspective regarding Litecoin’s fate. According to him, the halving event might trigger a “Sell the News” reaction. He pointed out a notable trend of increasing new addresses being created on the Litecoin network, with over 690,000 such addresses generated recently. Based on his observations, in the past five years, each time the number of new Litecoin addresses surpassed 350,000, it was followed by a substantial price correction.
Emphasizing the significance, it was observed that Litecoin whales executed a substantial transaction. They acquired nearly $59 million worth of LTC within a 48-hour timeframe last week. Based on these evaluations, Martinez proposes the idea that Litecoin holders might be patiently waiting for the right opportunity to sell their assets. This comes in the wake of the anticipated surge in LTC’s price following the halving event.
Also Read: Litecoin Halving ‘Hype’ Fails to Rally Price Despite High Interest
Can Litecoin’s dipping open interest pose a potential hurdle?
Historically, in previous instances, whenever the open interest of Litecoin futures fell below $500 million, there were significant price declines of 38% or more. The total value of open interest in Litecoin futures experienced a remarkable increase. It surged from $300 million on June 29 to $615 million on July 2. This further indicated a substantial rise in demand for leveraged futures contracts.
Then, on July 2, Litecoin’s price reached its highest point in 14 months but later dropped by 20% to $92. One concerning aspect is that Litecoin’s open interest remained above the $500 million threshold. This suggests buyers added margin to prevent liquidation. However, the risk of a sharp correction still persists.
On November 10, 2021, LTC saw a noteworthy accomplishment when its open interest surpassed $500 million. This coincided with the asset reaching a six-month high of $289. However, Litecoin’s price sharply plummeted by 48% within 24 days following the open interest dropping below the $500 million mark on November 14, 2021.
As per Coinglass, the current open interest is at $517 million, which is in close proximity to the $500 million threshold. Due to this proximity, the likelihood of a decline has been heightened. Additionally, at press time, LTC was trading for $89.60 with a 3.45% daily drop. Despite a positive overall trend of 31% throughout the year, LTC has experienced a recent downturn of 19% within the last 18 days.
Also Read: Litecoin: Pre-Halving Period Witnesses a Rise in ‘Millionaires’