Lighter (LIT) came under near-collapse pressure, with the altcoin trading in a strong downtrend. Since LIT was rejected at $1.3 a week ago, it has closed at lower lows, reflecting intense bearish pressure.
As a result, LIT fell to a new all-time low of $0.91 after breaking through the $1 support level. In fact, at press time, the altcoin was trading at $0.92, down 10.19%, adding to its weekly decline of 17%.
With the altcoin falling sharply, short position holders saw their profit margin skyrocket. Onchain Lens reported that a whale holding a 2x short position now enjoys a floating profit of $2.07 million.
The increase in the profit margin of short sellers reflects the intense bearish momentum that prevails.
The lighter faces intense sales pressure
The lighter continued to fall as sellers panicked and increased spending after LIT failed to hold the $1 support level, causing further decline.
In fact, buyers have almost disappeared from the market, their dominance having fallen to zero. At the same time, seller dominance increased to 2.8 million, indicating sell-side activity.
Sellers dominated the market over the past seven days, peaking at 4 million as demand continued to decline.
Along with this, seller strength jumped to 91, while buyer strength decreased to -8, further validating this seller dominance.
On the derivatives side, market participants reduced their exposure and withdrew significant capital from the markets.
Data from Coinglass showed that Lighter’s open interest fell from $193 million to $140 million, a drop of $54 million.
The decline in OI indicates aggressive market exits as traders reduced their exposure, most likely in anticipation of further losses. As a result, more than $171 million was withdrawn from the futures market.
Traditionally, weakening demand and strengthening activity on the sales side have tended to accelerate downward momentum, leading to lower prices. Thus, current market conditions have exposed LIT to additional potential downside risk.
Are there other downside risks?
Lighter broke above the $1 support, as sellers became increasingly aggressive. With the intensification of selling pressure, the downward momentum has further strengthened.
As a result, the Relative Strength Index (RSI) fell to 32, reaching almost oversold territory. The RSI fell consecutively from 55 to 32, reflecting the intensity of the sellers.
The momentum built further as the altcoin continued to hold below the MA and EMA, which were both above $1. These two momentum indicators signaled the likelihood of a continuation of the trend, holding current market conditions constant.
Therefore, if the trend persists, LIT will most likely break the $0.9 support and decline towards $0.85. To see a trend reversal, LIT must not only hold $0.9, but reclaim $1.
In doing so, the bullish momentum will be strong enough to allow for significant gains.
Final summary
- Lighter (LIT) fell below key $1 support, hitting a new all-time low near $0.91 amid a sustainable low.
- The price remains under severe bearish control, with a weekly decline of 17% and continued downward pressure.
