The dip in Litecoin’s value today is largely attributed to its overbought state and the anticipation surrounding the release of the Federal Reserve’s meeting minutes.
Aligning with a broader downturn across the cryptocurrency market, Litecoin’s price took a hit today.
On July 5, Litecoin (LTC) at $103.48 witnessed a more than 3% decline, bringing it down to $100.50. Coinciding with this, the entire cryptocurrency market capitalization dropped by 2%, hinting that traders are likely capitalizing on profits at the local peaks of numerous cryptocurrencies.
Overbought State of Litecoin
Litecoin experienced a surge of over 65%, attaining a year-to-date peak of $116 on July 2.
This upward trend can be largely credited to the excitement surrounding its upcoming halving event in August and its inclusion on EDX Markets, a newly inaugurated exchange supported by Wall Street heavyweights like Citadel Securities, Fidelity Investments, and Charles Schwab.
However, since then, the LTC price has taken a roughly 14% hit, including the 3% decline on July 5. This downturn could be attributed to its overbought status, indicated by its relative strength index (RSI) on the daily chart, typically leading to a price drop or consolidation sideways.
Impact of Anticipated Federal Reserve Minutes
Besides cryptocurrencies, Litecoin’s fall on July 5 mirrors similar downward trends in conventional markets. This coincides with the anticipation of the Federal Reserve’s June policy meeting minutes, expected to shed light on its stance regarding interest rates. These minutes are due to be released on July 5 at 6:00 pm UTC.
Market sentiment suggests that Fed officials have contemplated two additional benchmark rate hikes in 2023, regardless of the rate being untouched in the recent meeting. History shows that elevated interest rates typically spell bearish trends for cryptocurrencies, including Litecoin.
Looking Ahead: Litecoin Price Projection for 2023
Currently, Litecoin remains above the $100 mark, a point that has transitioned from resistance to support. As illustrated in the weekly chart, this point has also acted as the upper trendline of LTC’s current ascending triangle pattern.
With its position above the descending triangle’s upper trendline, LTC is in the technical breakout phase. Conventionally, a descending triangle reversal breakout could propel the price to heights matching the pattern’s maximum height.
Therefore, the target for Litecoin’s descending triangle reversal breakout is projected to reach roughly $240 in 2023, marking an increase of 140% from today’s price levels.
Alternatively, in a bearish scenario, Litecoin’s price may fall if the ascending channel pattern unfolds. This would entail the LTC price probing the lower trendline at approximately $85 in the third quarter, marking a decrease of about 15% from today’s prices.
Additionally, a breakdown of the bear flag could drag the LTC price further down. Under these circumstances, LTC/USD is at risk of falling to $40 in 2023, marking a decline of 60% from the current price level.