Litecoin Looking for the Bottom
- Approaching major round figure
- Several hammers formed within the week
- Getting close to the “death cross” – often a sign of the end
- Bitcoin is underperforming
Litecoin has been falling during the trading session again on Thursday, but only slightly so. We are currently trading around the $65 level, and it looks as if we still have support underneath at the $60 level. We have formed a couple of hammers during the previous handful of candles, and that is a sign of strength going forward. The $60 level will attract a lot of attention as it has done in the past, and it could be the beginning of a potential bottom. However, there are a litany of major problems.
We have seen numerous major issues in the Litecoin market, and it should be noted that Litecoin has been lagging behind Bitcoin for quite some time. It’s not only lagging in percentage gains, but also in momentum, and that is a major issue. As a result of this, Litecoin could have a bit of catching up to do, and that is probably going to be the main argument for the bulls.
Beyond that, we also have the issue of the 50-day EMA getting ready to cross the 200-day EMA, known as the “death cross.” Ironically, even though the death cross is considered to be a major sell signal for longer-term traders, and quite often happens towards the end of a downtrend, so this is something to pay attention to.
It is worth watching the Bitcoin market, as it is a bit of a leading indicator for the rest of the crypto market. If it rises, the rest of the crypto markets can do the same. However, if Bitcoin falls, then the bottom is going to fall out of this market. At that point, the market would very likely go looking towards the next major support level, which will be the psychologically important $50 level, followed by the structurally important $40 level. However, if Bitcoin were to rise, then it gives Litecoin a fighting chance to recover.
All things being equal, we are starting to see a bit of a separation between crypto markets, which is a good thing as we sort out the winners from the losers.
The next move is crucial
The next move will be crucial in the Litecoin market, because it’s almost now or never for a lot of these alternative coins. If it does break down, it’s very likely that the $40 level will eventually give way, and this could be one of those nightmare scenarios where the asset drops towards the $0 level. That is a bit of an extreme call, but with the rest of the crypto world rallying the way it has, Litecoin has some explaining to do and, more importantly, some gaining to do.
We are rapidly approaching the point where the winners will be separated from the losers for the long term. Some of the crypto coins will not survive. It looks very likely that the next several months could determine who survives and finds utility, and who breaks down and disappears to the dustbin of history. In any type of new technology like this, you have winners and you have the dead.