Litecoin network activity continues to increase as the market prepares for a breakout.
It’s been a little over three months since I last talked about the markets, when a single Litecoin was worth $46. At the time, I based my predictions on on-chain trend analysis, comparing trading volume and market price to find fundamental and stable values. In a previous post I said:
“This ratio is approximately 600 Txs : 1 USD, which gives an acceptable error reduction of approximately +-30%. Yes, this is a significant value, but with respect to volatility, the current Litecoin upper and lower bounds are $61 and $33 respectively. “If we continue to see transaction usage growing steadily on the network, we should expect prices to follow.”
Well prices currently sit just above $61, just below the multi-year log downtrend that began in 2017 and horizontal resistance at ~$65. Considering the recent trends in the cryptocurrency industry, I am looking for a confident and solid uptrend.
The TX:Price ratio analysis is currently underestimating the network according to my methodology. At the time of writing, daily network transactions have increased from ~20,000/day to ~45,000+/day, a sharp increase that provides lower, middle, and upper bounds of $52.5, $75, and $97.5 respectively.
“Anything outside of these ranges and prices can be considered fundamentally overvalued or oversold.”
We haven’t seen sustained network usage at this level since early 2018. At that time, the price was massively overvalued based on the TX:Price ratio. This indicates that the network has matured appropriately over three years to maintain this price.
I’ve mentioned before and I’ll repeat, that deals can get spammed more. However, the activity Litecoin is seeing continues and grows at a steady pace along with the rest of the market, so there is no cause for concern at these levels.
Upon a breakout, the only remaining resistance for Litecoin is the horizontal levels, the first being $81 and the second being $140. Assuming the trend continues, Litecoin will likely revisit triple digits once again before the end of 2020, hopefully permanently this time.
