• Litecoin (LTC) has seen a 130% rebound to nearly $100 after bottoming out near $40.50 in June 2022.
• Technical analysis suggests that LTC may wipe out most of these gains in the coming months due to a giant bear flag on the weekly chart.
• If the bear flag breakdown setup is applied, Litecoin’s price could drop to nearly $30.50, or 65% lower than the current LTC price.
The past few months have been a roller coaster for the cryptocurrency markets, with the Litecoin (LTC) price being no exception. After bottoming out near $40.50 in June 2022, Litecoin has seen a strong 130% rebound to nearly $100, primarily due to broadly improving risk-on sentiment and euphoria around its upcoming halving in August 2023. However, technical analysis suggests that this rally could be a “head fake” and that the LTC price could soon drop significantly.
On the weekly chart, the LTC/USD pair has been forming a giant bear flag – a bearish continuation pattern that occurs when the price consolidates inside an ascending, parallel channel after undergoing a strong downtrend. This suggests that the pair could resume its downtrend course if its price breaks below the lower trendline. Applying the bear flag breakdown setup to Litecoin brings its downside target to nearly $30.50, or 65% lower than the current LTC price.
Given the fact that Litecoin rallied significantly in the past few months, the bear flag breakdown setup signals that the coin could be in for a major correction. Moreover, it is possible that the LTC price could drop alongside riskier assets as macro analysts sound a bull trap alarm over this potential “head fake” recovery.
Overall, the technicals are pointing to a potentially sharp decline in the Litecoin price in the coming months. Therefore, those who are planning to add LTC to their portfolios should do so cautiously and be aware of the risks involved.