What is Causing the Drop in Litecoin Prices Today?

The crypto market has seen a decline today, with Litecoin (LTC) price dropping over 3% to $100.50. This mirrors the overall capitalization of the crypto market which has decreased by 2%, indicating that crypto traders are beginning to take profits from the recent highs of various cryptocurrencies.

Litecoin’s RSI turns “overbought’

Litecoin, a crypto currency, surged by more than 65% to reach a year-to-date (YTD) high of $116 on July 2. The gains seemed to be due to the excitement around its halvingin August and its listing on EDX Markets, a newly-launched exchange backed by Wall Street giants such asCitadel Securities, Fidelity Investments, and Charles Schwab.

Since then, however, the LTC price has corrected by nearly 14%, including the 3% drop on July 5. One reason could be its overbought relative strength index (RSI) on the daily chart, which usually leads to the price to go down or trade sideways.

Fed minutes pressure riskier assets lower

On July 5, Litecoin’s losses reflected the decline in traditional markets as traders anticipated the Federal Reserve’s June policy meeting minutes to be released at 1400 EDT. The market expects the Fed to raise the benchmark rates two more times in 2023, which is bearish for crypto currency such as Litecoin.

In addition to crypto currency, such as crypto.com and voyager crypto, the losses in Litecoin were similar to other riskier assets.

Litecoin price 2023 outlook

Litecoin has been able to remain above $100, a level that has shifted from being a resistance to a support. As seen in the weekly chart, this level has also served as the upper trendline of the ongoing ascending triangle pattern of LTC.

Due to its close above the descending triangle’s upper trendline, LTC has now entered a technical breakout stage. Generally, a descending triangle reversal breakout can result in the price increasing by the maximum height of the pattern.

Therefore, the descending triangle reversal breakout target for Litecoin is estimated to be around $240 in 2023, which is a 140% increase from the current price.

On the other hand, the Litecoin price may drop if its ascending channel pattern plays out in the bearish scenario. This involves LTC price testing the lower trendline at around $85 in Q3, a 15% decrease from the current price.

In addition, a breakdown of the bear flag can also cause the LTC/USD rate to drop to even lower levels. In this case, Litecoin price risks dropping to $40 in 2023, a 60% decrease from the current price, as shown below.