- LTC has seen an increase of almost 40% in the past five days
- The upcoming halving event could be a major reason for the price spike
Litecoin’s value has skyrocketed as the much-anticipated halving event approaches, making many holders happy who are now in a profitable position. Nevertheless, this upward momentum may also point to a possible downside to the cryptocurrency’s price trajectory.
– Realistic or not, here is the market cap of LTC in terms of BTC
Litecoin’s price, MVRV increase
In the past five days, Litecoin has seen a remarkable increase in value, rising by almost 40% according to the daily timetable chart. This increase was the highest in more than a year, making it an important milestone.
Litecoin was trading at around $110.8, although it had also seen a drop of more than 2%. However, despite this recent dip, it remained in the overbought zone and price continued to cross its short and long moving averages (yellow and blue lines).
Source: TradingView
In addition, the latest price spike has significantly impacted Litecoin’s 30-day Market Value to Realized Value ratio (MVRV). For example, data from Santiment showed that Litecoin’s MVRV was over 32%.
However, given the current state of the MVRV and the positioning of the Relative Strength Index (RSI), it is plausible to expect a potential downtrend in Litecoin price soon.
Source: Sentiment
Moreover, while analyzing the RSI of the price chart, it became clear that a downtrend was underway. Also, the MVRV indicated signs of deterioration, indicating a decrease in the value of LTC holdings.
LTC’s volume, active addresses show divergence
As the price of Litecoin rose, another notable metric that saw a significant increase was trading volume. According to data from Santiment, Litecoin noted a remarkable spike in trading volume, hitting an all-time high, mirroring the price surge.
Although the volume had fallen slightly at the time of writing, it remained above 1.3 billion.
Source: Sentiment
However, the situation turned out to be different when looking at the number of active addresses. Looking at the 30-day active addresses statistic on Santiment, there is a noticeable drop.
The number of active addresses even amounted to about 8 million. In contrast, it was close to 14 million in June before the decline began.
Pre-halving increase?
The recent surge in Litecoin’s value can be attributed, at least in part, to its long-awaited halving. The halving event occurs approximately every four years or after every 840,000 blocks mined. During this event, the block reward is halved. This process continues until the block reward per block reaches zero, estimated at about 2142.
Currently, the block reward for Litecoin is 12.5 coins per block, but would decrease to 6.25 coins per block after the halving takes place. The next halving event will take place in less than 30 days.
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Other ‘positives?’
According to Mint glass, there is an overwhelmingly positive sentiment about Litecoin’s price trajectory. For example, LTC’s funding rate on major exchanges flashed a positive reading.
This suggested that traders had expectations of a possible price increase in the future. However, the coming weeks will be crucial in determining whether the current move is a result of the pre-halving of FOMO (Fear Of Missing Out) or whether the positive trend can continue over time.