Will Grayscale’s win breathe life into Litecoin, and will a post-halving rebound begin?

On August 29, the U.S. Court of Appeals for the District of Columbia Circuit issued a new ruling. said Ultimately, the draconian Securities and Exchange Commission (SEC) was wrong to deny Grayscale the ability to convert its over-the-counter (OTC) Bitcoin Trust (GBTC) into a Bitcoin spot exchange-traded fund (ETF).

The regulator was previously barred Grayscale filed a lawsuit after converting GBTC into an ETF due to lack of measures to prevent price manipulation. Before ruling, the judge said the SEC needed to explain in detail why it denied Grayscale’s application.

Litecoin rebounds

The price of Bitcoin surged following the court’s statement today, and the aftermath of this pump had a positive impact on Litecoin. As it stands, BTC is up about 10%, rebounding sharply from the support around $25,800 recorded last week. Meanwhile, LTC, Bitcoin’s silver, rose 7% intraday and aims to make up for losses on August 17.

Litecoin is changing hands around $70 with a notable increase in trading volume. Typically in cryptocurrency trading, a spike in volume, regardless of trend direction, signals engagement and can provide a “hint” as to trader sentiment.

As volume increases and prices expand, it could suggest that bulls are positioned to take further profits in the sessions ahead. On the other hand, as trading volume increases, sudden losses may reduce the downside and push the price lower.

Will there be a rebound after the halving?

As seen on the daily chart, the expansion in LTC trading volume could signal a possible bottom for the digital asset, which has been under pressure over the past few sessions. For example, LTC fell 26% in August 2023 alone. This dump comes despite news that the Litecoin network had halved miner rewards to 6.25 LTC in early August.

In cryptocurrency, halving events have historically been associated with new cycles of increased demand for the native coin. In the case of Bitcoin, past performance shows that the coin tends to bounce a few months after a halving event. Meanwhile, Litecoin showed mixed trends, but the spot price is generally higher than in 2019, when it was cut in half.

It is yet to be seen whether the bull market will build on this and push the price of LTC higher in particular, as Grayscale fuels demand for Bitcoin and other proof-of-work altcoins like Litecoin. LTC price is currently trending inside the August 17th bearish candle.

Technically, this is bearish on volume analysis. Ideally, a sharp reversal and rally above $75 could recoup the losses from August 17, spur more demand, and potentially lay the foundation for an easing rally after the halving.

In this case, the loss on August 17 could mark the peak downside as LTC sets a triple bottom around the $60 and $65 support zones. Previously, LTC sought support in the region in March 2023 and December 2022.

Featured image from Canva, chart from TradingView