Litecoin tests crucial support zone

The world’s 14^th largest crypto by market cap, according to CoinGecko, has unwound all of its recent gains following last month’s congestion on the Bitcoin network.

At the time of writing, Litecoin is hovering just above the crucial mid-$70 support area, a region where prices had previously rebounded off en route to a near-30% surge in May.

Today’s gains of about 1.9% at the time of writing could be due to a technical rebound, after Litecoin prices fell past the lower bound of its Bollinger bands in recent sessions.

 

Note also on the weekly price chart, Litecoin has been testing its 50-week moving average (MA) for support of late. 

This has been a key support level for most of this year.

Meanwhile, Litecoin’s upside has been capped by its 200-week MA over the same time period.

 

Overall, the mood surrounding the crypto space has been further soured by the SCE’s lawsuits last week against major exchanges, Binance and Coinbase.

To illustrate the point, investors have withdrawn US$143.4 million from crypto-linked exchange-traded products during the past month, leaving the total of such assets now at US$7.66 billion, according to Bloomberg data.

The US regulatory crackdown has even prompted other US-based platforms such as eToro and Robinhood Markets to remove tokens cited within the SEC’s suits, such as Solana, Cardano, and Polygon (but not Litecoin).

It remains to be seen whether crypto aficionados may ultimately seek out non-US platforms to trade such tokens, provided proponents of such assets can overcome the “fear, uncertainty, and doubt” a.k.a. FUD that’s permeating across the crypto sector currently.

 

For Litecoin in particular, this could prove to be a crucial period.

• From a technical perspective, a daily close below $76 could send out a bearish signal.
  Such a drop may then clear the path for sellers to revisit  test the year-to-date low around $65.50 from back in March.
  
   
• Still, from a fundamental perspective, Litecoin bulls may still have cause to remain optimistic.
  Litecoin’s halving appears set for late July/early August.

A “halving” is when the rewards for securing and recording transactions on Litecoin’s blockchain are lowered by 50%.

“Halvings” tend to be preceded by a runup in the crypto’s prices.

 

However, given the worrisome clouds surrounding crypto, Litecoin bulls may have all to do to restore its year-to-date gains.

So far in 2023, Litecoin remains higher by 11.8% at the time of writing, though such gains are inferior compared to Bitcoin’s 58% and Ether’s 45.8% year-to-date gains respectively.