Litecoin Technical Analysis

Romain NEBOIT -

Hello Earth Citizen, welcome to this week's token analysis!

What a week we've had. $UST had the biggest meltdown in the stablecoin history. This event impacted $BTC and the whole crypto market, and prices are at a challenging stage. What does a Technical Analyst have to say!? 🤷🏻‍♂️

So let's go back to the beginning. Litecoin is one of the longest-established cryptocurrencies and this displays some of the fundamental properties of a solid payments network. Recall that Satoshi's original conception of Bitcoin as a Peer-to-Peer electronic payments system.

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Relevance to ReFi: Electronic payment systems are the core utility of blockchains, without which we would not have digital currencies – regardless of what the currency tokens represent. With Litecoin we have an example of how solid electronic payment systems using layered networks can achieve efficient wide-scale adoption and be integrated into traditional financial applications. The blockchain engines of these P2P payment systems are evolving to become faster and more power-efficient, in ways that can feasibly replace legacy financial systems with regenerative financial systems, at Internet scale.

What is Litecoin?

Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. This open-source global payment network is fully decentralised, without central authorities or intermediaries. Mathematics secures the network and empowers individuals to control their finances.
Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency $BTC. Litecoin is a proven medium of commerce complementary to Bitcoin with substantial industry support, trade volume and liquidity.

The project was born in October 2011, and unlike many modern cryptocurrencies, Litecoin was designed (like its big brother, Bitcoin) to be fair, decentralised and to provide ultimate utility to users. To this day, and ever since its creation in 2011, Litecoin was designed only ever to have a maximum supply of 84 million - protecting against inflation.

As part of Litecoin’s coin issuance, miners are rewarded a certain amount of litecoins whenever a block is produced (approximately every 2.5 minutes). When Litecoin first started, 50 Litecoins per block were rewarded to miners after every 840,000 blocks were mined (roughly every four years); the block reward halves and will keep halving until the block reward per block becomes 0 (approximately by the year 2142). The block reward is 12.5 coins per block and will decrease to 6.25 coins per block post halving.

Any change to these ‘rules’ requires all Litecoin participants to agree to approve the change by consensus.

Litecoin’s services

Litecoin is used to power a diverse range of services

Litecoin Core

Litecoin enables instant payments to anyone globally using peer-to-peer technology without a central authority. Management and processing of these transactions are carried out collectively by the decentralised Litecoin network.

MWEB

MWEB is the most extensive upgrade to the Litecoin network ever, promising to provide fungibility while improving Litecoin’s scalability. The lead developer behind Litecoin’s Mimblewimble Extension Block (MWEB) upgrade, David Burkett, spent more than two years working on it.

The MWEB upgrade went live in March 2022, as part of the Litecoin Core 0.21.2 release, that includes Taproot.

Litecoin Card

Unbanked powers the Litecoin Card™ which offers users the ability to fund their accounts with Litecoin and other supported cryptocurrencies for immediate, frictionless spending. The Litecoin Card is the most efficient way to purchase Litecoin.

Users can register for an account, pass KYC and have a virtual card issued to them immediately while a physical card is mailed to them. While other crypto debit cards hold users’ funds in a proprietary currency, the Litecoin Card is ideal for Litecoin enthusiasts who want to spend their Litecoin like any other currency!

Lightning Network

The Lightning Network was first proposed by Thaddeus Dryja and Joseph Poon in 2015. It was designed to solve one of the cryptocurrencies' most significant problems –scalability. Litecoin launched its Lightning Network in 2018.

The Lightning Network is a Layer-2 solution. Micropayments on the Lightning Network are executed by smart contracts that program the rules for transactions. The Layer-2 fees are small compared to fees charged by miners on the main blockchain, as the work performed by Lightning Network nodes is far easier than that done by miners.

Litewallet

Litewallet is the official Litecoin Wallet of the Litecoin Foundation. With a focus on security and user experience, Litewallet makes getting started with Litecoin very user friendly.

Omnilite

OmniLite is an open-source platform that facilitates the creation of decentralized tokens and smart contracts for digital assets, including tokens and NFTs.

As a protocol built on top of Litecoin’s blockchain, Omnilite has a distinct advantage over other blockchains due to its integrity, network security, scalability and comparatively low fees. The tokens created using OmniLite can be considered an extension of Litecoin, and as a result, the transactions from these tokens are recorded on Litecoin’s blockchain.

All digital assets created via OmniLite benefit from the Litecoin network’s attributes, technology and security.

$LTC Technical Review:

All prices shown are as of 11/05/2022 at 21:00 UTC+2

The current situation looks pretty bearish over the long-term, in concert with the rest of the crypto economy.

Of course, we could hope for a bounce, but technically this is wide open to a strong retracement, as volumes show an accumulation before breaking the previous support. The current week is unique because the first three days violently shut down prices.

According to Fibonacci, the following strong technical support would be the 100% retracement, at $USD 43.3. And the first resistance is the 0.382 point, at $USD 102.

In the short term, a technical bounce remains possible, but we’ll dive into this point on the next chart.

On this long-term chart, another interesting support is located at $USD 55, represented by a flat Weekly SSB.

Daily chart:

In the short term, this is equally clear. Prices broke the last support around the $USD 100 area. And are sinking.

The objectives are the same as the long-term analysis. On the other hand, prices are defending a previous high point on the chart above. This technical area is a potential bottom; we’ll need to see how the market will evolve during the next few days.

In Summary

Litecoin has long been a popular choice among crypto investors and since LTC was added to PayPal and Venmo in 2021, people are discovering the cryptocurrency even more. This greater accessibility for Litecoin could potentially attract casual users to discover and use blockchain and cryptocurrencies to send and receive money.

Thanks for reading, and let's hold tight on this roller-coaster!

Cheers,
Romain.

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. For tax advice talk to your accountant. DYOR – do your own research.