Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- US SEC didn’t categorize LTC, but CFTC mentioned it as a commodity in March.
- Long positions discouraged.
The US SEC’s lawsuit against Binance for securities laws violations has set the market into a sharp correction. Another CFTC filing in March against Binance singled out Litecoin [LTC], Ethereum [ETH], Bitcoin [BTC], and Binance USD [BUSD] as commodities.
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Although the recent US SEC is similar to the earlier CFTC filing, LTC hasn’t been mentioned as a security. At the same time, MATIC, SOL, ADA, and more have been singled out as securities.
LTC depreciated 6% in the past 24 hours and traded at $87.5 at press time. Similarly, BTC dropped below $26k as investors reacted to the news.
Will sellers push lower?
Source: LTC/USDT on TradingView
With a weak BTC and an upcoming FOMC meeting in mid-June, LTC could reverse May gains if sellers intensify control. Notably, the RSI (Relative Strength Index) retreated to the oversold zone, denoting increased selling pressure.
As such, LTC could breach the $84 support and drop to the demand zone of $74 -$78 (cyan). The demand zone is also a bullish order block (OB) formed on 13 March on the 4-hour chart.
On a bullish angle, a recovery attempt could be likely if the $84 support holds. Notably, the Accumulation/Distribution indicator has risen steadily since late May, highlighting an accumulation trend.
Hence, LTC could clear the $89 hurdle and retest $95, especially if BTC reclaims $26k. Moreover, the weekly chart was still bullish despite retreating to a near-neutral position as of press time.
Long positions discouraged
Source: Coinglass
How much are 1,10,100 LTCs worth today?
On the 4-hour timeframe, LTC saw over $80k of long positions wrecked compared to about $20k of short positions. It means the liquidation of long positions was four times greater than short positions, reiterating the short-term bearish outlook for LTC on the futures market.
Next week’s likely Fed rate hike could make a strong rebound elusive for LTC bulls. As such, tracking BTC’s movement is crucial before moving forward.