The Litecoin price has failed to rebound since the 12% retracement triggered by the latest Halving event on Aug 2. Facing the risk of costs outpacing the value of their block rewards, Litecoin miners have started depleting their reserves by millions of dollars. Is the LTC price at risk of a larger price drop?
Litecoin’s much-heralded halving event on Aug.2 has resulted in a 15% price correction from $94 toward the $80 territory. On-chain data examines how the ongoing sell-off among Litecoin miners could put LTC price at risk.
Litecoin Miners Have Offloaded $5 Million in the Last 5 Days
The completion of the Aug. 2 Halving event means the block rewards issued to miners were effectively slashed from 12.5 LTC to 6.25 LTC. Amid rising costs to run mining operations, Litecoin miners have already started to deplete their reserves rather than hold long term.
On-chain data from IntoTheBlock shows that LTC Miners have offloaded 60,000 coins from their reserves within the last 5 days. As shown below, the miners held a cumulative reserve balance of 2.48 million LTC on Aug 3. But by the close of Aug 6, it had dropped to 2.42 million LTC.
Miner Reserves assesses the trading activity of miners by tracking the cumulative balances in wallet addresses linked to recognized miners and mining pools. A decline in miners’ reserves is a bearish signal indicating that miners are actively selling off their block rewards.
As seen above, the LTC miners have rapidly depleted 2.5% of their total holdings within just 5 days of the just-concluded halving event.
Notably, the value rewards issued per block(s) mined have now been halved to 6.25 LTC. This means that many LTC miners may now be forced to continue selling in order to keep up with rising overhead mining costs.
If Litecoin cannot deliver substantial gains in the coming weeks, the LTC price is at risk of falling into a vicious downward spiral.
On-chain Data Suggests More Litecoin Sales Ahead
Despite the recent price drop, on-chain data suggests there’s still room for many Litecoin holders to sell at a healthy profit in the coming weeks.
As seen below, Litecoin MVRV ratio shows that most investors that bought LTC in the last 30 days still hold unrealized profits of about 7%.
The Market Value to Realization Ratio (MVRV) shows the recent investor’s net financial positions.
With current holders sitting on 7% profits, it means that they have sufficient wiggle room to sell more of their holdings until LTC price approaches their break-even range of around $77.
In conclusion, Litecoin runs the risk of retracing to the strategic holders and could mirror the miners’ bearish trades until Litecoin price declines by another 7%.
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LTC Price Prediction: Possible Retracement Toward $77
Considering the on-chain factors dissected above, LTC price is at risk of dropping below $75 in the coming weeks.
However, the GIOM data shows that Litecoin bulls will offer initial support around the $78 range. At that zone, 926,000 addressed had bought 4.96 million LTC at the average price of $77.
But if the bearish Litecoin miners can overturn that buy-wall, LTC could drop toward $75 as predicted.
Conversely, the bulls could regain control if LTC can rebound above $90. However, there’s a risk of a possible reversal around the $85 range. At that territory, 371,000 investors had bought 2.62 million coins at the maximum price of $85. If they book profits, they could trigger another bearish reversal.
Still, if Litecoin can move past that resistance, the $100 mark could be the next target.
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