Litecoin (LTC) has officially broken the bullish trend line on the daily timeframe, after several weeks of holding steady at this level and being continuously rejected in previous tests. This development raises caution in the short-term outlook for LTC, though it is not enough to confirm a clear trend reversal.
Momentum is stuck between signals
The momentum indicators are currently providing unclear signals. Specifically, the Stochastic RSI just bounced from the oversold area at 31 – typically considered a sign of potential short-term recovery.
However, the volume data tells a different story. Spot buying volume has remained almost unchanged, indicating weak demand from investors. According to data from Hyblock Capital, most recent transactions have centered around the $293,000 mark, while spot buying volume on Binance has decreased to $281,000, reflecting lower interest.
Notably, most trading activity is still focused on scales below $1 million, implying that the momentum mainly comes from retail investors. Meanwhile, institutional investors or large wallets seem to be standing aside, waiting for further confirmation signals regarding the next market direction.
The crowd of derivatives leans towards a bullish trend
In contrast to the indifference from the spot market, the derivatives data shows a more optimistic trend.
According to data analysis from CoinGlass, the Funding Rate of LTC has maintained a steady upward trend over the past week. This indicates that leveraged traders are still betting on the possibility of LTC recovering, despite the lack of confidence from the spot market.
In parallel, the Stochastic RSI bouncing up further reinforces the view that market sentiment is gradually shifting towards a positive trend, even if the price has not clearly reflected this change.
The next step for Litecoin
At this moment, Litecoin is sending mixed signals that make the market picture difficult to predict. While the spot market shows weak demand and caution from large investors, the derivatives market leans towards a more optimistic scenario, with a steadily increasing funding rate and gradually recovering momentum. This opens up the possibility that the drop of LTC below the recent important trend line could just be a 'fakeout', rather than signaling the start of a sustainable bearish trend.
