The peer-to-peer cryptocurrency Litecoin remained in a consolidation phase as open interest in the futures market remained muted and whale activity picked up.
Increased LTC whale activity
Litecoin (LTC), created by former Google engineer Charlie Lee, is trading at $64, a price it has held for the past two weeks. That’s about 27% higher than its August low and about 44% lower than its high this year.
The price action is tied to Bitcoin (BTC), which surged to a record high of $73,800 in March, fell to $49,000 in August and is trading at $54,000.
According to Santiment, Litecoin has seen a significant increase in whale buying activity in the past few weeks, a sign that some are buying the dip. Santiment has also noticed a significant increase in mentions on social media.
However, further Santiment data suggests that daily active addresses have declined sharply in the past few months.
Litecoin had over 327,000 active addresses on Friday, September 6, down from 801,000 in June.
Another big issue is that open interest in Litecoin futures has been weak over the past few months. Interest in the futures market was just over $243 million on Saturday, September 7, down from its year-to-date high of over $708 million.
Futures open interest is an important measure in the financial market because it shows the outstanding contracts that have not yet been executed. In most cases, a higher open interest indicates that the coin is in greater demand among investors.
Meanwhile, Litecoin’s funding rate has fallen from 0.078% earlier this week to 0.0016%. A positive funding rate means that holders of the coin are paying fees to those holding short positions. With the funding rate approaching negative territory, there is a risk that it could continue to decline.
Litecoin is below this major resistance level.
Technically, there are signs that Litecoin is trading below the downtrend line connecting the highest volatility levels since May 20. The coin also remains below the 50-day moving average, suggesting further downside.
If this happens, the price of Litecoin — one of the largest proof-of-work coins — could drop to the next major support level at $60, its low on January 3.
A break below this support level would signal a drop to the next major support level at $50, the August low. However, a volume-supported move above the downtrend line would signal further gains.
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