Digital silver is rallying, but “bullish” metrics might play cruel joke on LTC holders
The rally of the digital silver was the last thing the cryptocurrency market could have expected. However, the price of Litecoin has reached $83 in less than a month. All of that happened during the severe pressure on the market that has been crushing the performance of most of the digital assets in the space.
Santiment names reason
The jump above $83 and the big 8% surge was mostly fueled by the movement of dormant tokens in large wallets that have been accumulating and holding LTC for the last few months. According to the on-chain data provided, it was the largest dormant token movement tracked in four years.
⚡️ #Litecoin jumped above $83 on a big +8% surge in just an hour while the rest of the markets have been relatively quiet. 3 weeks ago, @santimentfeed measured the largest amount of dormant tokens being moved in 4 years. $LTC‘s price has jumped +47% since. https://t.co/pV5t8zBP0w pic.twitter.com/DFLT7UnNQC
— Santiment (@santimentfeed) December 5, 2022
However, Santiment analysis might be confusing: the movement of large assets on the network itself should not provide any additional support to the coin’s value since it does not provide any funding for bulls who are willing to push the asset’s price upward.
Historically, the movement of dormant coins has been a sign of an upcoming surge of selling pressure on the market. However, the logic behind Santiment’s analysis does not rely on the direction of the aforementioned assets.
The increasing activity on dormant wallets might be a sign of a cycle shift: from accumulation to distribution. We witnessed the same kind of network behavior back in September-November 2021, when Bitcoin reached the all-time high and the activity of dormant wallets rose exponentially.
Considering the number of LTCs that have not moved since the cryptocurrency market rally back in 2017, Litecoin might be miles away from the local top and will still show us unprecedented strong performance while battling one of the worst market conditions in the industry’s history.