The recent decision by the Federal Reserve to keep interest rates unchanged has had a positive impact on the crypto market, with Litecoin standing out among altcoins. In just a few hours, Litecoin has recorded significant double-digit gains, signaling a steady growth trend in the market. However, some on-chain metrics suggest that Litecoin’s price may be overvalued, which could lead to strong selling pressure if the price struggles to break through resistance levels.
One of the factors driving Litecoin’s price surge is the speculation surrounding a potential Litecoin-based exchange-traded fund (ETF). With an 87% chance predicted on Polymarket, investors are hopeful that the US Securities and Exchange Commission (SEC) will approve the ETF this year. The SEC has initiated a public comment period for the proposed Canary Litecoin ETF, giving stakeholders the opportunity to provide feedback that will inform the SEC’s decision-making process.
Despite the positive sentiment surrounding the potential ETF approval, Litecoin’s MVRV ratio is declining, indicating that the last realized value is approaching LTC’s market value. This discrepancy suggests that the price increase may not be fully supported by the value being realized by holders, raising concerns about overvaluation.
ETF analyst Eric Balchunas from Bloomberg noted the significance of the progress made by the altcoin ETF in the approval process, but uncertainty remains about the timing of the SEC’s decision. It is still unclear whether the SEC will expedite the approval process or adhere to the full 240-day review period.
In terms of price action, Litecoin has experienced a surge from $110 to $134, with buyers currently holding the price above the 23.6% Fibonacci level to maintain momentum in a buying zone. At the time of writing, LTC is trading at $131.6, reflecting a 17.1% increase in the last 24 hours.
Technical indicators suggest that buyers have the upper hand, with the 20-day EMA at $119 and an RSI above 69 indicating a favorable market for buyers. A breakout above the downtrend line could trigger a rally towards $150, potentially extending to $165. Conversely, a sharp reversal from the downtrend line would signal the influence of sellers at higher prices, potentially pushing the LTC/USDT pair back towards the 50-day SMA at $120.
Overall, Litecoin’s price surge and the speculation surrounding the potential ETF approval have created a bullish sentiment in the market. However, caution is advised as overvaluation concerns and resistance levels could pose challenges for further price gains. Investors should closely monitor key technical levels and market developments to make informed trading decisions.