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On July 15, Litecoin closed above the falling wedge pattern, signaling an increase in buying pressure. Altcoin had been trading in this formation since March 31. While this marked a bullish turning point for the altcoin, investors who sold their assets to capitalize on the rise faced significant losses. A falling wedge pattern occurs when the price of an asset moves between two downward-sloping trend lines. The upper trend line acts as a resistance level, while the lower trend line serves as support.
What is Happening with Litecoin?
Litecoin started trending in this pattern on March 31, causing its price to drop by 27% since then. As of the time of writing, the altcoin was trading at $71.74.
When an asset’s price breaks above the falling wedge, it is a bullish signal. This indicates that buyers have outperformed sellers and the price may enter an upward trend. On-chain data revealed that some market participants who took advantage of this breakout to sell their assets experienced significant losses yesterday. This is based on the asset’s network profit/loss (NPL) data readings. Yesterday, this data dropped to -5.25 million.
An asset’s NPL tracks whether the owners across the network are selling at a profit or loss. When this value drops, it indicates that, on average, owners are experiencing losses on their investments. This suggests a bearish trend in the market due to panic selling and capitulation by investors.
Important Details on the Subject
An evaluation of LTC’s Price-Daily Active Addresses (DAA) data indicates that the recent rise in the altcoin’s value might be short-lived. This data compares an asset’s price movements with changes in the number of daily active addresses. Investors use this to track whether price movements are supported by corresponding network activities.
At the time of writing, LTC’s Price DAA Divergence was negative at -36.78. This showed that the asset’s price was increasing faster than its DAA, suggesting that the price rise might be due to speculation or short-term buying rather than increased adoption or long-term investor interest. This puts it at risk of relinquishing its recent gains.
