The news is that Litecoin worth about $70 million is about to be sold, and the price might fall below $70. Network activity has also decreased, and Litecoin may be overvalued.
In the past seven days, the price of Litecoin [LTC] has risen by 4.18%, trading at $74.64. However, if coin holders decide to proceed with confirmed sell orders on exchanges, all these gains could be wiped out.
According to data from IntoTheBlock, market depth on exchange chains shows more coins lined up on the demand side. In trading, ask is to sell, and bid is to buy.
Litecoin holders prepare for liquidation
The amount of LTC on offer from bidders is significantly lower. Specifically, once Litecoin reaches $74.65, about 928,200 coins worth nearly $70 million will be sold.
If this happens, the price of the coin could fall, possibly targeting between $72 and just under $70. AMBCrypto has found another indicator supporting the coin’s price reduction.
This time, it’s the Network Value to Transactions (NVT) ratio. The ratio considers the relationship between the market value and transactions on the network.
When market cap grows faster, the NVT ratio rises. In this case, the network is overvalued.
However, if the trading volume exceeds the market value, the NVT ratio falls, indicating that the network is undervalued.
According to Glassnode’s data, as of the time of writing, Litecoin’s NVT ratio has increased. Therefore, LTC is overvalued relative to the current market conditions.
Therefore, the price of the cryptocurrency may decline in the short term. In addition to the above indicators, AMBCrypto also checked Litecoin’s MVRV ratio.
More profit, more problems
MVRV represents the market value to realized value. It measures the profitability of holders in terms of valuation. If the MVRV ratio is at an extremely high level, the coin may be considered overvalued.
However, if the reading is negative, it is undervalued and may provide a good buying opportunity. As of the time of writing, Litecoin’s 30-day MVRV ratio is 14.10%. This means that if all LTC holders sell, the average return will be around 14%.
From a broader market perspective, LTC may be overvalued as most cryptocurrencies are trading sideways. Additionally, we also checked the active addresses on Litecoin.
According to Santiment’s data, Litecoin’s 24-hour active addresses have dropped to 401,000. When active addresses increase, it means that more unique addresses are engaging in transactions.
However, the decrease indicates otherwise. The number of active addresses on the network has significantly decreased compared to the last week of June.
If network activity continues to decline, the demand for LTC is likely to decrease. If this is the case, the price may have no choice but to decrease. But if buying pressure increases, the price of Litecoin may bounce back.