Litecoin [LTC] has been on a streak of gains as it recorded substantial growth in value. This recent surge has propelled around 80% of LTC investors into a profitable position. Could this lead to a phase of profit-taking, potentially signaling an end to the coin’s current bullish run?
Impressive Performance of Litecoin
Over the past seven days, Litecoin experienced a significant 40% surge in price. This positive momentum continued in the last 24 hours, with the coin’s value jumping by close to 5%. As of the latest data, LTC was being exchanged at $128.8.
Earlier analysis by CryptoCrypto suggested that a key factor contributing to this bullish climb might be similar to that observed with XRP, potentially setting the stage for a substantial upsurge. Moreover, this increase could transpire independently of a broader altseason.
Furthermore, a recent tweet from IntoTheBlock disclosed that nearly 80% of LTC investors were currently in profit, a factor attributed to the coin’s upward trajectory. This marked the highest profit level seen since 2021.
While this positive trend is promising, it might also present challenges for LTC in the days ahead. Typically, when a significant portion of investors are in a profitable position, they often opt to sell their holdings and exit their positions. This heightened selling pressure could potentially stall or bring an end to an ongoing bull run.
Is Litecoin Facing Challenges?
An analysis by CryptoCrypto revealed that Litecoin’s inflows were surpassing its outflows. Specifically, on December 1st, the coin witnessed an outflow of 164.27k LTC.
On the same day, the inflow of LTC stood at 258.34k, indicating a notable disparity. This dynamic suggests that investors were offloading their assets to capitalize on profits.
Data from Glassnode corroborated this trend, showing that Litecoin’s holder net position change had remained negative in recent weeks, suggesting investors were liquidating their positions.
However, the concerning aspect is that this trend may persist. At the time of assessment, Litecoin’s fear and greed index stood at 86%, signaling that the market was exhibiting “extreme greed.”
Historically, when this metric reaches such levels, it often indicates a signal to sell, potentially prompting more investors to divest their holdings. Additionally, Litecoin’s On Balance Volume (OBV) has also shown a decline.
A decrease in the OBV suggests waning demand for the asset, hinting at a possible correction in its price. Should this materialize, LTC could retreat to its closest support level around $119 once more.