Why did Litecoin price drop today?

Litecoin prices are down today, mirroring the downward trend elsewhere in the cryptocurrency market.

Litecoin (LTC) prices fell more than 3% to $100.50 on July 5. The overall cryptocurrency market cap fell 2% on the day, suggesting that traders have begun to take profits at local tops across a number of cryptocurrencies.

Litecoin’s RSI Becomes ‘Overbought’

On July 2, Litecoin rallied more than 65% to hit a year-to-date high of $116.

The gains were largely due to excitement surrounding the August halving and the listing of EDX Markets, a newly launched exchange backed by Wall Street giants such as Citadel Securities, Fidelity Investments and Charles Schwab.

However, LTC price has since corrected by nearly 14%, including a 3% drop on July 5. One reason for this is that its relative strength index (RSI) is overbought on the chart, which usually leads to a drop in price or sideways consolidation.

Fed minutes weigh on risk assets

Litecoin’s July 5 drop mirrors similar bearish moves in traditional markets. Traders are awaiting the minutes of the Federal Reserve’s June policy meeting to understand the institution’s views on interest rates. The minutes will be released on July 5 at 6:00 PM UTC.

The market believes that despite the pause in the last meeting, Fed officials still discussed the possibility of two rate hikes in 2023. Higher interest rates have proven to be unfavorable for cryptocurrencies such as Litecoin.

Litecoin Price Outlook 2023

Litecoin is currently holding above $100, a level that has flipped from resistance to support. As shown on the weekly chart below, this level is also the upper trendline of the popular LTC ascending triangle pattern.

As the price closed above the upper trendline of the descending triangle, LTC entered a technical breakout phase. Generally speaking, a descending triangle reversal breakout can see the price rise to the maximum height of the pattern.

Therefore, Litecoin’s 2023 descending triangle reversal breakout target is around $240, which would represent a 140% gain from current price levels.

On the other hand, if Litecoin’s ascending channel pattern plays out in a bearish scenario, then the price of Litecoin will fall. This would involve the LTC price testing the lower trendline around $85 in the third quarter, which is about 15% from the current price.

Furthermore, a breakout of the bear flag could lead LTC prices further lower. In this case, there is a chance that LTC/USD could drop to $40 in 2023, a 60% drop from the current price, as shown below.