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Published:
- Litecoin sees demand increase as Spot inflows reach 2021 levels.
- An attempted bullish breakout resulted in heavy liquidations and extreme volatility.
Litecoin (LTC) is in a consolidation phase characterized by an upward trend since August. It appears he hasn’t benefited from the recent hype seen over the past couple of months, but that may no longer be the case.
Litecoin buyers have been very active this month, but more importantly, the cryptocurrency’s liquidity situation also appears to be changing.
Recent data shows that LTCs just experienced their highest net cash inflows since November 2021.
The timing was important because November 2021 marked the peak of Litecoin price action during that year’s bull cycle. But could this indicate that LTC is poised for a strong recovery?
Data so far suggests renewed interest in long-term care.
Recent findings have also revealed that short-term holders are increasing their bags of Litecoin. Their balances have increased by 31% in the last four weeks.
IntoTheBlock suggests that this latest spike could signal a major rally ahead for the cryptocurrency as liquidity rotation in the crypto market begins to take place.
The increase in liquidity was not seen only in the derivatives segment. According to Coinglass, Litecoin’s open interest (OI-weighted funding rates) just climbed to its highest level in the last six months.
This confirmed a spike in the derivatives segment.
Source: Coinglass
The rise of open interest may explain LTC’s recent volatility. The cryptocurrency has been stuck in a consolidation phase since August during which it has been moving in an ascending channel.
Litecoin Volatility Sparks Increase in Liquidations
The last 24 hours have been characterized by extreme volatility which has seen the price attempt to break out of its range.
The price had initially dropped to $68 in a false bearish move that was followed by a massive surge in demand pushing it all the way up to $82.78.
Source: TradingView
LTC is back to $75.71 at press time, meaning the price has returned to the ascending consolidation range. Nonetheless, this volatile price movement indicates that there might have been a reshuffling of short and long positions.
Litecoin price action had already demonstrated a sharp increase in demand from around November 6, which translated to six days in the green.
Consequently, the appetite for long positions has increased, with long positions tipping the scales from November 11 onwards.
Source: Coinglass
Read Litecoin (LTC) Price Forecast 2024-2025
A total of $3.09 million in Litecoin liquidations took place on exchanges over the past 24 hours. Long positions were higher at $2.04 million, while short positions stood at $1.06 million.
This result suggests that the final pullback after a breakout attempt could have resulted in the erasure of long positions.
