- On-chain metrics supported a significant increase in Litecoin before the halving.
- Those who bought LTC at lower prices have stopped taking profits.
Litecoin [LTC] has reached a critical spot that could cause a bounce, AMBCrypto noted. At the time of writing, the Market Value to Realized Value (MVRV) Z-Score, obtained from Glassnode, was -0.23.
This indicator measures the valuation of a cryptocurrency. Around February 29, the MVRV Z-Score had a similar value.
At that time, LTC changed hands for $74.62. Two days later, the price of the coin rose to $94.47.
But that wasn’t the only instance in which Litecoin displayed such an. In March the benchmark was negative and the price had fallen. But 10 days later, the value rose to $109.29.
Source: Glassnode
Does LTC care about 2020?
At the time of writing, the price of LTC was $78.62, with Bitcoin [BTC] Halving takes place in less than five days. If history repeats itself, Litecoin’s price could rise before the Bitcoin event.
But before we conclude that a price increase was inevitable, it is important to check the coin’s performance during the last two halvings.
In 2016, the price of Litecoin was $3.19 a few days before the halving. And on the day of the event, the value was $4.12. But during the 2020 halving, LTC moved sideways as the price fluctuated between $43 and 46.
However, times have changed because market conditions then were not what they are now. As a result, AMBCrypto deemed it necessary to evaluate other metrics that could impact LTC.
One of the metrics we analyzed was the realized limit. This measure tells something about the sentiment in the market.
If the realized limit increases, it means that coins purchased at lower prices are spent and participants make a profit.
This trend could lead to further correction decreasing Realized Cap indicates a perceived undervaluation. At the time of writing, Litecoin’s one-day realized cap was -49.83 million, suggesting a recovery could be near.
Source: Santiment
After the event comes the parabola
Should the benchmark fall lower, the likelihood of a rise in LTC before Bitcoin’s halving could increase. But if the benchmark rises, that prediction could be overturned.
Despite the bullish potential, not every market participant was convinced of the coin’s short-term potential. This was evident from the number of holders.
According to Santiment, the total number of Litecoin holders has fallen from 8 million to 7.98 million.
Finally: AMBCrypto evaluated investor capitalization. This is the difference between the Thermocap and the Realized Cap. It also serves as a way to identify bottoms or tops in a cycle.
Source: Glassnode
Realistic or not, here is the market cap of LTC in BTC terms
At the time of writing, Investor Capitalization showed that Litecoin was closer to the bottom than the top.
Therefore, the price of LTC has the potential to rise before Bitcoin’s halving, and afterward its value could rise as well.