- Litecoin was oversold several times compared to Bitcoin and Ethereum.
- LTC saw a surge in retail demand, but whales were still on the sidelines.
August was perhaps the most anticipated month for Litecoin [LTC] holders as a result of the halving. However, the month is coming to a close and the price of LTC continued to favor the bears.
Read more about Litecoins [LTC] Price Forecast 2023-24
Litecoin’s bearish bias indicated a loss of excitement among holders. However, the cryptocurrency, often described as digital silver, has experienced a significant discount since its peak in July. Is the price undervalued, or should traders anticipate more downsides?
For starters, LTC’s press-time price of $65.47 represented a 63% premium from low to low price point during the crypto winter. On the other hand, there was a 43% discount from the highest price in July.
Source: TradingView
While the LTC discount represented a healthy discount from July highs, it was much steeper when we looked at the historic high. The cryptocurrency peaked at around $417 during the peak of the 2021 bull run. The press time price represented a 41% discount from the 2021 peak.
We decided to compare the downside of Litecoin to that of Bitcoin and found something interesting. BTC only fell about 62% against its ATH. Meanwhile, during the same period, ETH was at a 675% discount from its all-time high.
Based on the ATH discounts, we can conclude that LTC is more overvalued than its counterparts.
Is LTC generating significant demand?
Note that Litecoin bears appear to be in recession after dominating since July. The price is also in oversold territory and is also at a support level that was tested earlier in March. Technically, we should see some accumulation in this region given the support and oversold conditions and significant discount.
LTC’s supply distribution metric revealed something interesting. Retailers have bought into the dip, as evidenced by the upward trend in addresses valued between 10 and 1,000 LTC (indicated in red and orange).
On the other hand, whale addresses recorded a net outflow in the past ten days (addresses indicated in green, pink and blue).
Source: Sentiment
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The above observation confirmed that whales were still on the sidelines, holding back the bulls. The number of daily active addresses has fallen significantly in recent days compared to levels at the beginning of August.
Source: Sentiment
At the time of writing, Litecoin’s MVRV ratio had dropped to its lowest level in the past four weeks. This meant there was less incentive to sell below this level. Still, it is no guarantee that the price will not fall further.