On-chain data suggests that developments in these two Litecoin indices could explain why the cryptocurrency’s prices have been rising recently.
Litecoin’s volume and social dominance have been on the rise recently
In new mail On X, on-chain analytics firm Santiment discussed what Litecoin’s fundamental metrics looked like during its recent price surge.
Two indicators are important here: transaction size and social dominance. The first, Transaction Volume, tracks the total number of currencies (in USD) that participate in transfers on the LTC network.
When the value of this measure is high, it means that investors engage in a large amount of trading activity related to the asset. Such a trend could be a sign that interest in LTC is high at the moment. On the other hand, a decline in the index could indicate that investors may not be paying much attention to the cryptocurrency because it is not moving by any significant amount.
Now, here’s a chart showing the trend in Litecoin trading volume over the past few months:
The value of the metric appears to have spiked in recent days | Source: Santiment on X
As shown in the chart above, Litecoin transaction volume has been on the rise recently, which means activity on the network is up. To date, the index has reached a peak of $3.97 billion, the highest level since June 2023.
In general, a large amount of network activity leads to fluctuations in the price of a cryptocurrency. However, the emerging price movement can take the asset in either direction, as the transaction volume only measures the pure amount of transfers made on-chain and does not contain information about the split between buys and sells.
But in the current case, the spike in activity was followed by a rise in the price of the asset, suggesting that investors were engaging in accumulation.
The second indicator in the chart, Social Dominance, tells us what percentage of total social media discussions related to the top 100 coins by market cap are contributed by Litecoin alone.
From the chart, it appears that LTC’s social dominance has also been on the rise recently, with discussions related to the coin contributing about 1.1% of the total sector.
This indicates that the average trader is starting to take an interest in cryptocurrency. Interest in the retail sector can help fuel rallies, but too much of it may be something to be wary of, as fear of missing out (FOMO) has historically led to higher prices.
Litecoin price
Litecoin approached the $75 level earlier in the rally, but the coin appears to have seen a pullback since then as it is now back at $72.5.
Looks like the price of the coin has been riding an uptrend in recent days | Source: LTCUSDT on TradingView
Featured image from Dall-E, Santiment.net, chart from TradingView.com