Litecoin (LTC) Has Recently Seen a Sharp Surge

Litecoin (LTC) has recently seen a sharp surge before encountering a downturn, finding support around $116.02. This level has become crucial for traders as it will determine whether Litecoin experiences a major rebound or a further decline.

Litecoin (LTC) has recently seen a sharp surge before encountering a downturn, finding support at $116.02. This level is crucial for traders as it will determine whether Litecoin experiences a major rebound or a further decline.

After a significant surge, fueled by positive macroeconomic news and increased crypto adoption in the U.S. reserve, Litecoin’s price hit a key resistance at $127.70.

However, this surge was followed by a decline as investors began taking profits. Consequently, Litecoin fell below the 38.2% Fibonacci retracement level at $120.48, a crucial zone that would have helped sustain the upward momentum.

Following the failure to maintain levels above $120.48, pullback intensified, triggering increased selling pressure. During this decline, Litecoin found brief support at the 50% Fibonacci retracement level at $118.25.

Despite this support, resistance at $123.46 showed that bears were still in control, pushing the price down further. According to the Fibonacci retracement levels, $116.02 is a critical support level, and a breakdown here could signal an even deeper pullback toward $112.85.

The decline in price is reflected in various bearish technical indicators. The Exponential Moving Average (EMA) cross has shown a bearish momentum, with the price now trading below the 9-day and 26-day EMAs. This signals potential downside risk and indicates that bulls have not been able to sustain their momentum.

The chart structure also hints at a potential double-bottom pattern, suggesting that Litecoin could see a reversal if the $116 level is defended by buyers.

If Litecoin manages to bounce from this level, it could rise back toward the $121.74 resistance, which aligns with the last key moving average resistance.

Netflow Analysis: Accumulation or Selling Pressure?

Netflow data provides insights into the movement of Litecoin. Over the last 24 hours, the netflow has been negative, with significant outflows of around -50.49K LTC from exchanges. This indicates strong accumulation by investors, who are withdrawing their coins.

As investors reduce their presence on exchanges, the available supply decreases, which in turn could reduce selling pressure. This factor could be crucial in supporting the critical $116 level.

However, in the short term, there were some inflows of +9.16K LTC to exchanges, which might signal short-term selling interest. Despite these fluctuations, the 30-day net outflow of -68.96K LTC suggests that there is a broader trend of accumulation.

If outflows continue at this rate, it could lead to a complete absorption of the available Litecoin on exchanges, ultimately resulting in a supply squeeze and pushing prices up.

Profitability and Market Sentiment

Regarding investor sentiment, the break-even analysis reveals that a significant majority of Litecoin holders—76.78%—are still in profit. This reduces the chances of widespread panic selling, as most investors are still sitting on gains.

However, should Litecoin decline further toward $113.83 or below, some investors may be forced to cut their positions to avoid deeper losses, increasing selling pressure.

Conversely, a rise above $119.36 would bring more traders into the profit zone, decreasing selling pressure. If Litecoin can break above the $127.70 level, most positions will be in profit, potentially fueling a push toward $132. But if the price dips below $113.83, downward pressure could mount, and LTC might test $108.80.