Litecoin (LTC) broke the $400 mark, hitting a new all-time high of $414 on Bitstamp on May 10.
The problem with buying Litecoin is that it has become so expensive in a very short amount of time. The world’s tenth largest cryptocurrency by market capitalization is 215% more valuable than it was earlier this year, skyrocketing from $124.42 to a new record high of $413.90.
Its massive rally has beaten traditional markets on the year-to-date (YTD) timeframe, with many independent analysts now predicting the move to extend to $500.
Alternate trading
The incredible gains in the Litecoin market come after a widely bullish move in the crypto market. Cryptocurrency’s top altcoin competitors, including Ether, XRP, Cardano and many more, have posted better returns, with Dogecoin, a joke cryptocurrency, up over 17,000% YTD at one point. the point.
Jason Lau, managing director at OKCoin, a crypto services business based in San Francisco, highlighted the inverse correlation between Litecoin and Dogecoin, noting that the DOGE/USD rate fell by 12 % during the period saw the LTC/USD exchange rate increase by more than 12%.
So… people are rotating from$ DOGE (-12%) on $ LTC (+18%) ?? https://t.co/DQmWqXu5fp pic.twitter.com/l3GH2cSbic
– Jason Lau (@jasonklau) May 10, 2021
Meanwhile, the Litecoin Dominance Index, an indicator of Litecoin’s strength relative to the rest of the crypto market, has risen from 0.96% on Sunday to a peak of 1.11%. in Monday. That further reflects the changing sentiment towards the Litecoin market as other alternative crypto rallies show signs of cooling off.
But Litecoin now struggles with the same overvaluation risks that caused the Dogecoin price to drop by as much as 33% in previous sessions. At the core of this bearish similarity lies a classic momentum oscillator, known as the Relative Strength Index (RSI), which once predicted a possible price reversal in the global markets. Now it tells the same story about Litecoin.
Litecoin is overbought?
LTC/USD daily chart shows its RSI at inflection near 79.02. That’s 9 points above the overbought threshold, which previously led to the price correction.
Usually, a short-term trend reversal in the Litecoin market – when its RSI crosses above it – causes the price to test the 20-day exponential moving average (blue wave) as temporary support. Meanwhile, the prolonged sell-off has traders see the 50-day simple moving average (blue wave) as the primary downside target.
Therefore, a potential pullback following the recent explosive move risks taking LTC/USD to $252-$310 based on current moving average valuation.
Macroeconomic catalyst
Away from technical indicators, macroeconomic catalysts continue to support the crypto market as a whole.
A study conducted by Charles Schwab found that more than 51% of millennials and Gen Z investors are more likely to invest in cryptocurrencies than traditional stocks. Their interest in the emerging digital asset sector has been heightened by fears of inflation and a depreciating dollar, especially as central banks around the world respond to the coronavirus pandemic with how to loosen monetary policy.
For example, the Federal Reserve has clarified that it will continue its $120 billion monthly asset purchases program while maintaining its benchmark rate near zero at least through 2023. That did. reduce the opportunity cost of holding traditional safe-havens such as bonds and dollars in the investor sector.
Meanwhile, the correlation between Bitcoin (BTC) and Litecoin stands near 0.40, according to data gathered from Crypto Watch.
.