Following a prolonged downturn, Litecoin [LTC] recently witnessed a short-lived uptick, breaking free from a descending pattern. However, after reaching a peak of $76, the digital currency has undergone a steep decline.
Despite the decrease in price on a weekly basis, the on-chain transactions of LTC have spiked to a level not seen in the last 17 months.
Increased On-Chain Activity for Litecoin
Based on data from IntoTheBlock, Litecoin has encountered one of its most active weeks over the past year.
During this period, a total of 512.8 million LTC tokens have been moved on-chain, translating to a value of $36.6 billion.
Similar levels were previously witnessed back in May 2023, averaging around $5 billion daily. This surge suggests that Litecoin is continuously engaged, with many users participating across different platforms.
Typically, a rise in on-chain transactions indicates growing adoption, reflecting an increased demand for LTC.
Implications for LTC Price Trends
As evident from the surge in on-chain transactions, LTC is facing heightened demand and positive market sentiment.
Despite a recent pullback, with LTC currently trading at $68.81, marking a 3.01% decline in the past 24 hours and a 3.74% drop over the week.
Preceding this, Litecoin had been on an upward trajectory, recording a 2.47% increase in the last month.
While LTC might have experienced a setback in the past week, the overall market outlook remains optimistic.
For example, the +DI of DMI stands at 23, surpassing the -DI at 18. This suggests that the momentum of the uptrend remains positive and is expected to continue.
This trend is further supported by a favorable Chaikin Money Flow (CMF) at 0.03, indicating strong buying pressure and the dominance of buyers.
Delving deeper, the MVRV ratio Z score of -0.3 indicates a favorable opportunity for long-term holders and investors to accumulate LTC. Hence, the current dip presents a chance for buyers to enter the market, heightening buying pressure and potentially driving prices upward.
Additionally, the Total Flows for Litecoin have decreased from a peak of 291.5k to zero, implying reduced exchanges inflow and a preference for holding. This behavior signals that investors are keeping their LTC off exchanges in anticipation of price appreciation.
In essence, the upsurge in on-chain transactions hints at strong demand for LTC. With positive market sentiment and investor preference, Litecoin is well-poised to retake its monthly uptrend.
Therefore, if these conditions remain stable, LTC could reclaim the $76 resistance level, overcoming past rejections. Conversely, if the downside pressure persists, the next support level for LTC is anticipated at $63.4.