Litecoin (LTC) closed above its falling wedge yesterday, signaling a surge in buying pressure. The altcoin has been trading within this pattern since March 31.
While this was a positive milestone for the altcoin, traders who took advantage of the rally and sold their holdings suffered significant losses.
Litecoin Holders Suffer Investment Losses
An asset trades within a falling wedge when its price fluctuates between two descending trend lines. The upper trend line acts as a resistance level, and the lower trend line acts as a support level.
Litecoin began following this trend on March 31, causing its price to fall 27% since then. At the time of writing, the altcoin is trading at $71.74.
Litecoin Analysis. Source: TradingView
When the price of an asset breaks above a falling wedge, it is a bullish signal. It signals that buyers are outnumbering sellers and that the price may be ready for an uptrend.
Chain data showed that some market participants who took advantage of the breakout and sold their assets suffered significant losses yesterday.
This is based on the coin’s Network Realized Profit/Loss (NPL) metric, which dropped to -5.25 million yesterday.
Read more: Litecoin: A Complete Guide to What It Is and How It Works
An asset’s NPL tracks whether holders of the asset across its network are selling at a profit or a loss.
When this reading drops like this, it means that on average holders are losing money on their investments. This indicates that the market is bearish as traders panic and sell and capitulate.
LTC Price Forecast: Price Rise May Be Unsustainable
An assessment of the LTC price/daily active address (DAA) divergence metric suggests that the altcoin’s recent price gains may be short-lived.
This metric compares an asset’s price movements to changes in the number of its daily active addresses. Investors use it to track whether price movements are supported by corresponding network activity.
At press time, LTC DAA price divergence was negative at -36.78. This showed that the coin’s price was rising faster than its DAA. This suggests that the price increase may be due to speculation or short-term buying, and not necessarily increased adoption or long-term investor interest. This puts it at risk of losing recent gains.
If this happens, LTC price could drop to $70 at the 0.236 Fibonacci retracement level.
Read more: How to Buy Litecoin (LTC) and Everything You Need to Know
Litecoin Analysis. Source: TradingView
If the current trend continues, the growth may continue and reach $78.11.
