Source: PaxForex Premium Analytics Portal, Fundamental Insight
Traders and investors slowly begin to realize several developments. They include that the US economy is headed into a recession, inflation anchored itself, central bankers in the G7, led by the US Federal Reserve, ignored warning signs, a bear market manifested itself, and cryptocurrencies are correlated to equity markets. While central banks kept an artificial bull market alive between 2009 and 2021, printing money 24/7, it created the birth of the cryptocurrency sector. Initially, the sector was hailed as an alternative, privacy-focused, decentralized to the fiat system.
Today, very few cryptocurrencies honor the early claims, with Litecoin punished for its privacy upgrade Mimblewimble. South Korea essentially kicked out Litecoin, led by the delisting at Bithumb and Upbit, citing the Mimblewimble Extension Blocks (MWEB) network upgrade violates anti-money laundering (AML) regulation. Bitcoin and Ethereum lead the sell-off across the cryptocurrency sector as global equity markets extend their crash from central bank-sponsored all-time highs, but there is a silver lining. Cryptocurrencies that fulfill niche requirements, like Litecoin, begin to show extraordinary upside potential with lower downside risk. Privacy-focused individuals and companies see the value of Litecoin, while the masses will dump non-essential portfolio holdings, where Bitcoin remains the number one name drop.
Monero and Zcash are the leading privacy coins. They have a combined market value below $5B and are the top privacy coins, but Litecoin ranks as the 20th largest cryptocurrency. The decision by South Korean exchanges to delist Litecoin remains misinformed, as privacy coins have a negative reputation as criminals use them. Before judging privacy coins based on a few bad actors, everyone should consider that the US Dollar is the number one currency for criminals. It also remains the top reserve currency for the global system. Volatility will remain elevated, and the bear market will continue, fueled by central banks, but patient long-term traders and investors who look for value in the cryptocurrency market should consider Litecoin at current levels.
The forecast for the LTC/USD is turning cautiously bullish amid a possible capitulation sell-off. Price action disconnected from its flat Ichimoku Kinko Hyo Cloud. Today’s price gap to the downside dragged the Kijun-sen and the Tenkan-sen lower, but patient traders should look out for a closing of the gap and a potential short-covering rally. The CCI collapsed deep into extreme oversold territory, and the current move lower is unsustainable. A sideways trend is likely to follow, giving bulls a chance to group. A breakout above -100 could trigger a move to the upside from depressed levels. Can bulls launch a comeback and pump the LTC/USD into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the LTC/USD remain inside the or breakout above the 38.95 to 51.65 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 43.90
- Take Profit Zone: 72.80 – 83.00
- Stop Loss Level: 29.30
Should price action for the LTC/USD breakdown below 38.95, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 29.30
- Take Profit Zone: 17.10 – 22.20
- Stop Loss Level: 38.95
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
