Litecoin prices tanked nearly 22% in under one hour this Thursday as the cryptocurrency markets joined the global markets in an unprecedented selloff which has called into question the position of altcoins and cryptos as safe-haven assets.
Litecoin (LTCUSD) dropped to $37.73 as at the time of writing, well off its intraday highs of $48.79 as the crypto markets seem to have been caught by the spreading coronavirus bug. Litecoin has a positive correlation with Bitcoin, and today’s steep drop coincides with the 18% drop that BTCUSD has experienced in the last one hour. Bitcoin traded at close to 5850 before undergoing a sharp bounce that has taken it to the 6300 price level.
In February 2020, crypto markets had surged at the same time that the stock market selloff began, triggering assertions that traders were offloading their positions in risky assets and sending same to Bitcoin, Litecoin, Ethereum and other cryptos.
However, this week’s bearish price action, which has been exacerbated by the selloff this Thursday, seems to have put paid to the supposed safe-haven status of cryptocurrencies. Some experts believe that the bottom has not yet been reached and with the coronavirus continuing to spread, those fears may not be unfounded.
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Technical Outlook for LTCUSD
LTCUSD has dropped 22% today, making it the worst performer of the top 10 cryptocurrencies. LTCUSD has broken below the 39.48 price support and is now heading towards the previous highs of 28 Nov 2018 and 3 Feb 2019, which are acting as role-reversed support levels at the 34.85 price level. Price briefly violated this price area, but the candle was rejected and bounced back above this level. However, there is a likelihood that a retest of this price area may occur before the day runs out.
A successful breakdown of 34.85 opens the door towards the support level of 29.99, which is formed by the lowest prices of January 2019. Below this area, the 26.92 price lows formed by the two shoulders of the inverse head and shoulder pattern of December 2018 could come into focus.
On the flip side, failure to break down 34.85 could allow for a brief price recovery towards 39.48 and possibly 42.15. Traders on the LTCUSD pair have to look towards price activity on Bitcoin’s pairing with the US Dollar for direction.
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