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Litecoin Rises, but Upside Seen Limited as ‘Digital Silver’ Struggles for Direction

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Litecoin has emerged from the China ICO meltdown at around half of where it was when the month started. Prices appear to have stabilized around the $50 range, although long-term price behavior is likely to be defined by a narrow trade corridor.

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LTC/USD Drifts Lower in Asia

Litecoin fell against the dollar on Friday, as the market continued to consolidate following an upbeat start to the week. The LTC/USD has rebounded more than 6% to trade above $48, according to Bitstamp. Prices hovered within a daily range of $46.68 and $48.90.

The technical indicators are mixed, with Relative Strength showing prices emerging from oversold territory. The MACD shows negative underlying momentum, as prices struggle for direction.

The digital currency recently sold for a record high price of $90 before a devastating crash wiped out half its value. The loss came on the heels of a broader market collapse following China’s decision to ban ICOs and Bitcoin exchanges.

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The China-induced selloff dragged the LTC/USD to $33 last Friday. Prices rebounded headed into the weekend before reaching the $56 range on Tuesday. The market has been in downward consolidation since. The $33 region provides a strong support level, with resistance likely found between $55 and $65. Barring any surprise news event, prices are likely to remain within this narrowly defined range for the foreseeable future.

Digital Silver

Litecoin is currently the world’s sixth-largest cryptocurrency, with a market capitalization of $2.6 billion. At current values, Litecoin is worth roughly 64,844 BTC. Litecoin is a fork of the Bitcoin Core client, having been created in 2011 by Charlie Lee. For that reason, it is commonly referred to as the ‘digital silver’ to bitcoin’s gold.

The token lost a key developer during the summer after BIP 148 creator Shaolin Fry announced he was stepping away from Litecoin development. Although this had no immediate impact on prices, it’s considered a major loss for the project. There are more than 1,100 cryptos on the market, and participants have internalized an ‘adapt or die’ mentality. Currently, 874 tokens have a measurable market value, according to CoinMarketCap.

The value of all cryptocurrencies in circulation is $128.2 billion. The market peaked at $179 billion on Sept. 1.

LTC/USD (Bitstamp)

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Altcoins

BitConnect Cryptocurrency Tanks After Company Shuts Exchange

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The value of BitConnect’s BCC token plunged on Wednesday, just one day after it abruptly announced it was closing down its controversial lending and exchange operation.

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BCC Fire Sale

BitConnect’s native token plunged to a session low of $5.69 as investors rushed for the exit. At last check, the cryptocurrency was down 90% to trade at $18.97, according to data provider CoinMarketCap. That was the lowest level since June, bringing BCC’s total market cap to $149 million.

Total daily trade volume for BCC amounted to $23.4 million, with HitBTC accounting for roughly 37% of the transactions.

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More pain is coming for BCC as investors rush to erase any exposure they once had to the controversial parent company. Various reports have indicated that holders of BCC have struggled to sell their tokens despite the platform appearing operational. This suggests that another fire sale may be on the horizon.

BitConnnect announced Wednesday that the rapid decline of its token’s price was a direct result of releasing all of its members’ coins at once.

The decline also happened to coincide with a broad selloff in the broader cryptocurrency market. The total market cap of all cryptocurrencies in circulation has declined by roughly $250 billion since Saturday, with all the major coins suffering heavy losses.

Halting Operations

BitConnect closed down shop after receiving two cease-and-desist letters from the Texas State Securities Board and the North Carolina Secretary of State Securities Division.

The company was honest about the reasons for exiting the market in a blog post that appeared on Jan. 16. According to the post, continuous bad press and multiple DDoS attacks also factored into its decision to close the operation. According to the blog post, all active loans will be transferred to users’ BitConnect wallet in a deposit worth $363.62, a rate that was calculated based on the coin’s average closing price for the past 15 days.

“In short, we are closing lending service and exchange service while BitConnect.co website will operate for wallet service, news and educational purposes,” the post said.

Prior to the announcement, BitConnect was accused by many in the blockchain community of being a Ponzi scheme. The criticisms have been levied by voices as diverse as day traders to Vitalik Buterin, the founder of Ethereum. The company operated a four-tier business model that promised users higher returns for bigger initial deposits. Through proprietary “volatility software” and other tools, BitConnect guaranteed users 1% ROI on a daily basis and up to 40% per month. Value investors rarely take such promises seriously.

If we take the blog post at face value, the team has no plans to abandon the project entirely. The post added: “This is not the end of this community, but we are closing some of the services on the website platform and we will continue offering other cyptocurrency services in the future.”

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Technical Analysis: Bitcoin Hits First Correction Target as Volatility Reigns Supreme

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The violent correction that created a full-on panic in the cryptocurrency segment continues to unfold in a rather orderly way from a technical standpoint, reflecting the extreme nature of the preceding rally. That said, the percentage losses in some of the coins are huge, and the collapse of Bitconnect accelerated the process, spreading uncertainty among investors, and sentiment quickly got bleak.

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Bitcoin remains in the center of attention, and the most valuable coin finally breached the $10,000 level today, causing another strong wave of liquidation in the majors, that could be the base of a more durable bottom, and a consolidation in the coming days after the crazy last couple of days.

The coin is now oversold from a short-term perspective, and although further losses are likely before the end of the cycle, given the still only neutral long-term momentum readings, a counter-trend move is possible in the coming days. Below, $9000, strong support levels are still found at $8200 and near $7650.

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BTC/USD, 4-Hour Chart Analysis

Altcoins got slaughtered in the two-day crash with Ripple leading the way lower, while Ethereum also lost its relative strength amid the broad sell-off and its recent trendline break. ETH got close to the next major support level at $740 during today’s move, and as the short-term momentum is now oversold, a bounce to the zone around $1000 could be ahead. We still expect the correction to continue in the token, as the long-term momentum remains overbought, with key support at $625 and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple fell as low as the $0.85 support level during the crash, and although the coin rebounded above $1 afterward, it remains 70% off its recent all-time highs. Long-term investors could already accumulate small positions on the short-term sell-offs, although the correction will likely continue, and a prolonged consolidation phase might also be ahead. Key support levels are now found at $0.85 and $0.68, while resistance is ahead at $1.25.

XRP/USDT, 4-Hour Chart Analysis

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Market Update: Bitcoin at $10,000, Ripple at $1, Ethereum below $1000 as Carnage Continues

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Yesterday’s China induced technical breakdown led to an unmitigated disaster in the crypto segment, as all of the majors crashed, erasing hundreds of billions of market cap in the process. The collapse of the alleged Ponzi scheme of Bitconnect added insult to injury and caused another wave of selling in late trading, driving the price of Bitcoin to $10,000, a bit earlier than expected.

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BTC/USD, 4-Hour Chart Analysis

The most valuable digital currency rebounded as much as 15% after the late-session crash, but the selling pressure remained strong and today BTC briefly traded below yesterday’s low, with most of the majors holding up above the crash low.

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That said, the sell-off is unlikely to be over and volatility is probably here to stay for the week, with violent swings in both directions. The coin is still likely to push lower, with a possibly lengthy bottoming phase, so a quick recovery to the record highs is unlikely, but strong support is found below $10,000 at $9200, $8200, and $7650.

Traders should be aware of the elevated risk in short-term positions here, while long-term investors could slowly accumulate positions on the sell-offs, as the coins are headed to oversold territory.

A Little Perspective

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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