Litecoin’s Halving Approaches Amidst Price Concerns: Will Scarcity Keep LTC Above $90?
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Litecoin's upcoming halving event is causing concerns among traders regarding whether it can maintain a price above $90 due to scarcity effects. The current price of Litecoin is $93.38, having decreased by 19% in the past 18 days. Despite this, it has shown a positive performance of 31% throughout the year, with significant gains in June and July, reaching a 14-month high of $115.
A worrying statistic indicates a potential sharp correction as Litecoin futures open interest drops below $500 million, a pattern that has previously led to significant price drops of 38% or more. The recent surge in Litecoin futures open interest has led to an increase in demand for leveraged futures contracts, but there is a risk of potential liquidations when traders' positions are closed due to insufficient margin.
Historical data shows that in November 2021, February, and May 2021, when Litecoin's open interest dropped below $500 million, there were significant price drawdowns shortly afterward, suggesting a potential 30% drawdown from the current price of $94 to $62.
Traders and investors are advised to keep a close eye on Litecoin's open interest to assess potential risks and make informed decisions in the volatile cryptocurrency market.
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