The Litecoin (LTC) price has hovered within the $81 – $85 range over the past week. A closer look at the underlying on-chain data analyzes the plausibility of bearish predictions that LTC prices may sink below $65 in the coming weeks.
Halvings are a highly impactful event on every Proof of Work blockchain network. They significantly impact price action and, more importantly, mining activity.
On-chain data shows that, since the latest Litecoin halving on August 2, mining activity has begun to slow. Will it spook whale investors, exacerbate the ongoing decline in transaction activity, and trigger a larger price drop?
Litecoin Mining Hash Rate Has Started to Decline
The August 2 halving saw the Miners’ revenue halved from 12.5 LTC (~$1000) to 6.25 LTC (~$500). With mining costs staying relatively the same and reserves fast-depleting, some miners have started to pack it in.
Data from IntoTheBlock indicates that on July 30, a few days before the halving, LTC Hash Rate stood around 826 TH/s (Terahash per second). But at the close of August 12, it has now dropped to 767 TH/s, sinking nearly 8% within two weeks of the August 2 halving.
Measured in Terahash per second (TH/s), Hash Rate refers to the estimated aggregate computational power provided by miners to validate transactions and secure a blockchain network.
Hence, the decline observed above suggests miners are now shutting down or dedicating fewer resources to operate the Litecoin network.
This is a bearish signal because a drop in mining activity could reduce transaction speeds and the overall security of the blockchain architecture.
While the current LTC Hash Rate is still healthy, it has now dropped below the 30-day average of 769TH/s, signaling that the decline could linger. If that happens, Litecoin’s price may sink below the $80 support level.
Whales Are Getting Spooked and Looking Elsewhere
Litecoin is generally lauded for its high throughput and low transaction fees compared to Bitcoin. This has often made it attractive for day trading whale investors who conduct high-volume transactions. But worryingly, on-chain data suggests that the recent halving event has unsettled them.
The chart below shows that Litecoin whales have been conducting just about half of the trading activity they did last month.
On July 13, validators on the Litecoin network confirmed 1,367 Large Transactions, notably pushing the price above $100 resistance in the process. A month later, it has gradually dwindled to just 773 large LTC transactions. This represents a whopping 44% decline in the whales’ trading activity.
Quite literally, Whale Transaction Count sums up the daily number of confirmed transactions that exceed $100,000. When it drops persistently, it means that day-trading whales are growing unsettled and looking elsewhere for alternatives.
Transaction speeds could follow suit if the Hash rate continues to drop and further dissuade the whales. Considering that the whales’ trading activity provides much-need liquidity to the market.
A significant drop in liquidity could also mean that the LTC price may sink below $80, especially when competing traders begin to lower prices to get orders filled quickly.
Litecoin Price Prediction: Bears Have Their Eyes on $65
The on-chain indicators highlighted above are starkly similar to conditions that preceded the LTC post-halving price drops in 2015 and 2019. Hence, the LTC price may sink as low as $65 if these trends do not abate in the coming weeks.
The Global In/Out of Money (GIOM) data which shows the purchase price distribution of current LTC holders, also confirms this bearish outlook. If LTC drops below $80, it will find its next significant support around $65.
As seen below, 7.38 million addresses had bought 953,000 LTC at the average price of $65. To avoid slipping into a net-loss position, they could offer significant support.
But If the decline in the Hash rate does not reverse, the LTC price could decline further toward $60.
Conversely, there have been talks of Litecoin miners exploring options to modify their methods and equipment to mine Dogecoin simultaneously. This could help boost the miners’ revenue and gradually reignite the LTC Hash rate.
If that option works out at scale, the bulls could push the LTC price above the $90 mark. But as seen above, a cluster of 1.47 million addresses have bought 13.4 million LTC at the average price of $89.
Litecoin could have difficulty clearing that resistance if they look to book profits. However, if that resistance level cannot hold, LTC could reclaim the $100 milestone.
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