Litecoin is one of many crypto tokens that has been struggling to garner any upwards momentum in recent times.
LTC has formed an incredibly close correlation to Bitcoin as of late, which has caused it to enter a long-held bout of sideways trading. Like BTC, it is currently trading at the lower boundary of this range and is beginning to flash some overt signs of weakness.
Analysts believe that its next big movement could prove to be dire for bulls, as it may plummet to levels not seen since early-2017.
There is one fractal pattern signaling that this next drop could be followed by a significant upside movement.
Its imminent decline, however, may be a symptom of the weakness that the cryptocurrency has seen relative to the rest of the markets in 2020. One trader is pointing out that it has been woefully underperforming many of its peers.
Litecoin Forms Close Correlation to Bitcoin But Severely Underperforms Crypto Market in 2020
At the time of writing, Litecoin is trading down just over 1% at its current price of $41. This is around the price level at which it has been hovering around for the past couple of days.
LTC’s over-month-long trading range has been established between $40 and $50, with the crypto only breaking above and below these boundaries on a few brief occasions.
This trading range has been formed in tandem with Bitcoin forming its range between $9,000 and $10,000.
Because Bitcoin and Litecoin have grown incredibly correlated as of late, it does appear that whether or not LTC breaks below $40 will depend on if the benchmark crypto is able to maintain above $9,000.
From a macro perspective, 2020 hasn’t been too great for Litecoin, as it is trading down nominally from where it started the year.
One analyst spoke about this in a recent tweet, explaining that LTC, Bitcoin Cash, and XRP have all been quite lethargic as of late, being unable to see “V-shaped” recoveries since the mid-March meltdown.
“Now if we look at the performance of the ‘Majors’ we’ve only really had ADA with a stronger return. Huge markup and the only one to have exceeded the Feb high. Weakness in recovery for BCH, LTC and XRP. Reduced % returns, rounding off and a huge distance from the Feb highs.”
Image Courtesy of Cold Blooded Shiller. Chart via TradingView.
LTC Likely to Decline to Early-2017 Lows Against Bitcoin
“LTCBTC: Can’t rule out another leg down. Would be a decent area to accumulate from,” he explained.
The same analyst also notes that this could form a similar fractal pattern to one seen a few years ago, signaling that this next decline could be just what is needed to kick off a parabolic uptrend.
Image Courtesy of TraderXO. Chart via TradingView.
Featured image from Shutterstock. Charts from TradingView.