Source: PaxForex Premium Analytics Portal, Fundamental Insight
The fallout from the FTX collapse, where it appears the founder and former CEO Bankman-Fried embezzled funds and defrauded clients, continues to cause ripple effects across the cryptocurrency industry. Worries about the health of Crypto.com emerged, and others have called for contagion to result in more failed projects and companies across the sector. Litecoin managed to buck the trend and provided a rare spot of bullishness. While the LTC/USD trading volume has declined, it reached another milestone in its existence. Litecoin reported $1M in financial transactions for 2022, and while it appears minor compared to dozens of metrics, it confirms that Litecoin continues to move in the right direction.
Litecoin also benefits from an increase in its mining difficulty, which reached all-time highs and continues moving higher. An increase in mining difficulty usually results in a fresh bull cycle. Adding to the bright fundamental outlook is the announcement by MoneyGram, a publicly-listed NASDAQ company, to offer a service to buy, trade, and store Litecoin. It will increase its reach, and the fast, low-cost transactions, plus enhanced privacy and anonymity protocol MimbleWimble, which caused some exchanges to de-list Litecoin, make it one of a few cryptocurrency projects that remain true to the original vision for the sector.
The FTX collapse, and expected fallout over the next few months, sent the price of Bitcoin and Ethereum tumbling. The capital outflows added to the surge in bullishness for Litecoin, which initially plunged with the rest of the sector before mounting a massive comeback. A brief drop below 48 followed by a rally eclipsing 61, with the 70 area the next target, from where the LTC/USD may challenge six-month highs for a powerful year-end rally.
The forecast for the LTC/USD remains bullish after this cryptocurrency pair completed a breakout above its bullish Ichimoku Kinko Hyo Cloud. Price action may retest the Senkou Span B or tread sideways until it closes the gap, resulting in short-term volatility, before extending its reversal. The flat Kijun-sen confirms the lack of bearish pressures, while the Tenkan-sen continues to move lower. Traders should monitor the CCI after recording a higher low and reversing above the zero level. This technical indicator has plenty of upside potential and is expected to advance into extreme overbought territory. Can bulls extend their run and guide the LTC/USD into its horizontal resistance area and new multi-month highs? 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 57.30 to 66.60 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 61.85
- Take Profit Zone: 72.80 – 79.20
- Stop Loss Level: 52.40
Should price action for the LTC/USD breakdown below 57.30, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 52.40
- Take Profit Zone: 40.00 – 47.20
- Stop Loss Level: 57.30
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