Why Litecoin price could crash nearly 50% ahead of third LTC halving event
Litecoin (LTC) is ready to undergo the third halving event, which will reduce its block rewards from 12.5 LTC to 6.25 LTC. Taking a closer look at Litecoin price a month before the halving reveals an interesting outlook that could predict the fate of LTC holders.
While the pre-halving rally is noticeable not just in a low market capitalization altcoin like Litecoin, it is more pronounced in Bitcoin. Interestingly enough, Litecoin price action forms a local top roughly a month before the halving event. One can speculate that this could be traders who capitalized on the pre-halving rally cashing in their profits.
Hence, this local top formation often leads to steep correction. Benjamin Cowen, an analyst, posted his observations regarding the same on social media platform X.
A closer look at the technical indicators on the weekly timeframe reveals that the second Litecoin (LTC) halving event’s price action resembles the third LTC halving event price action. The Relative Strength Index (RSI) for the second event hovered around 50, the midpoint, before slipping below it, which triggered a 61% crash over the next five months. The second halving also noted a decline in the Awesome Oscillator’s (AO) histograms above the zero line, which eventually led to a flip below it.
If history repeats, causing RSI and AO to flip below their respective mean levels, Litecoin price could trigger a steep correction.
Bearish targets for Litecoin price short sellers
As seen in the chart below, Litecoin price is currently trading at $91.13. As LTC hovers comfortably above the declining trendline that serves as a support level, investors need to focus on the equal highs at $96.46 and the critical level at $94.12.
If bears are lucky, there might be a wick to the upside that sweeps $96.46, which could be a great entry for short sellers.
The targets are fairly simple. The $85.32 barrier was a stiff resistance level between April and June and has not been retested as a support level since the breakout on June 30. It is important to note the reaction of LTC as it revisits this key barrier.
If the said level fails to hold, short sellers can expect the downswing to continue until Litecoin price comes closer to $78.04. Here, bears can book partial profits. But the two key levels where sell-side liquidity is present are $65.57 and $47.32. These barriers are roughly 27% and 48% away from the current position.
Investors also need to note that the third quarter is typically bearish for Bitcoin, and as BTC slides lower, the rest of the crypto market continues to follow in its footsteps. Hence, a 50% crash in Litecoin (LTC) price is not out of the logical boundaries.
As confident as this forecast for Litecoin price might sound, traders must also look at the invalidation thesis. If Litecoin price conquers the $100 psychological level and flips the said hurdle into a support level on a higher timeframe like daily or weekly, it would not only attract sidelined buyers but also scare the bears away. The pressure created from spot buys coupled with the closing of short positions could propel Litecoin price to the next meaningful hurdle at $140.