Litecoin (LTC) Falls Under $80, Is It Time To Buy Now?
May 09 2023 - 1:30PM
NEWSBTC
Litecoin has continued to decline and has now slipped under the $80
level, but if a metric is anything to go by, the coin may be near
the bottom. Litecoin Is Now In The MVRV Opportunity Zone According
to data from the on-chain analytics firm Santiment, some altcoins,
including Litecoin, are showing underbought signals after the
recent price decline. The “MVRV” (Market Value to Realized Value)
is an indicator that measures the ratio between the market cap of a
given asset and its realized cap. The realized cap here refers to a
sort of “true” value model that says the actual value of any token
in the circulating supply is the price at which it was last moved
on the blockchain, and not whatever the current price of the asset
is. The MVRV compares the market cap (that is, the current price)
with this realized cap to estimate whether the cryptocurrency is
undervalued or overvalued at the moment. When the value of this
indicator rises above 1, it means the given coin may be becoming
overpriced. On the other hand, a decline below this line implies
underbought conditions for the asset. Related Reading: Litecoin
(LTC) Price Falls After Bulls Fail To Maintain Momentum Santiment
has defined its own “opportunity” and “danger” zones for the MVRV
on the respective sides of the 1 mark, after entering which the
asset attains a higher probability of bottoming/topping out. Now,
here is a chart that shows the divergence of the MVRV indicator
from these zones for various cryptocurrencies in the sector: Looks
like a lot of these coins are in the green region currently |
Source: Santiment on Twitter The way that Santiment has defined the
divergence (that is, the distance from the zones) has made it so
that a buying signal occurs when an asset’s MVRV divergence crosses
1, while a selling signal takes place below -1 (this orientation is
the opposite of what’s usually the case in the MVRV ratio; this
flip is done with the intention to make the metric more intuitive).
From the chart, it’s visible that most of the assets in the market
are in the positive region currently, suggesting that they are
close to being underbought. A few of these, like Litecoin, have
outright entered into the opportunity zone, meaning that this may
be a good time to buy the asset. Related Reading: Bitcoin Price In
A Turbulent Week: This Crypto Market Strategist Weighs In Litecoin
has entered into this zone as its value has slipped below the $80
mark for the first time since March and has put the average
investor into a state of loss. Historically, the more investors
have been in a state of loss, the closer the price of the
cryptocurrency has come to a bottom. This is the reason why the
aforementioned opportunity zone has provided ideal points for
buying into the asset. In the case of Litecoin, a bullish narrative
in the form of its halving, an event where its mining block rewards
will be cut in half, is also right around the corner now, so there
is an increased probability that the price could bottom out and
rebound soon. It’s uncertain, however, whether the bottom is
already here or if there is still some drawdown to go. LTC Price At
the time of writing, Litecoin is trading around $79, down 1% in the
last week. LTC has declined recently | Source: LTCUSD on
TradingView Featured image from Kanchanara on Unsplash.com, charts
from TradingView.com, Santiment.net
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