On-chain data suggests that the movement of these two Litecoin indicators could explain why the cryptocurrency saw its latest price rally.
Litecoin volume and social dominance have increased recently
In a new article on X, on-chain analytics firm Santiment explained what Litecoin’s underlying metrics looked like during its latest price rally.
There are two relevant indicators here: trading volume and social dominance. The first of these, transaction volume, tracks the total amount of tokens (in USD) involved in transfers on the LTC network.
When the value of this measure is high, it means that investors are participating in a large amount of trading activities related to the asset. Such a trend may be a sign that interest in long-term care is currently high. On the other hand, the fact that the indicator is low may suggest that investors are not paying much attention to the cryptocurrency as they are not moving a significant amount.
Now here is a chart that shows the trend in Litecoin trading volume over the past few months:
The value of the metric appears to have spiked in recent days | Source: Santiment on X
As seen in the chart above, Litecoin trading volume has seen an increase recently, implying an increase in activity on the network. So far, the indicator has reached a high of $3.97 billion, the highest level since June 2023.
Typically, high network activity leads to cryptocurrency price volatility. However, this emerging price action can move the asset in either direction, as trading volume only measures the pure amount of transfers taking place on-chain and does not contain any information on the breakdown between buys and sells. .
In this case, however, the spike in activity was followed by a rise in the price of the asset, suggesting that investors participated in the accumulation.
The second indicator in the chart, Social Dominance, tells us the percentage of total social media discussions related to the top 100 coins by market cap that Litecoin alone contributes to.
From the chart, it is apparent that LTC social dominance has also seen an increase recently, with discussions related to the play accounting for approximately 1.1% of the industry total.
This suggests that the average trader is starting to pay attention to cryptocurrency. Retailer interest can help fuel rallies, but excessive quantity may be something to watch as fear of missing out (FOMO) has historically led to record prices.
LTC Price
Litecoin had approached the $75 level earlier in the rally, but the coin appears to have seen a pullback since then as it is now back at $72.5.
Looks like the price of the coin has been riding an uptrend in recent days | Source: LTCUSDT on TradingView
Featured image of Dall-E, Santiment.net, chart from TradingView.com
