BTN News: In the past week, Litecoin (LTC) has gone up by 4.18% and is now trading at $74.64. However, these gains might vanish if coin holders decide to sell on various exchanges.
Understanding Market Depth and Demand-Supply Balance
According to IntoTheBlock, the market depth on exchanges shows more coins on the demand side. In trading, demand means selling, while offering means buying.
Litecoin Holders are Preparing to Sell Their Coins
The data shows that there are fewer LTC coins on offer. Around 928,200 coins, worth nearly $70 million, are ready for sale if Litecoin reaches $74.65. If this happens, the price could fall to between $72 and just below $70.
Network Value to Transaction (NVT) Ratio Explains Market Trends
AMBCrypto found another metric that points to a possible price drop. The Network Value to Transaction (NVT) ratio measures the link between market capitalization and transactions. A high NVT ratio means the network is overvalued when market capitalization grows faster than transaction volume.
Market Value to Realized Value (MVRV) Ratio Shows Profitability
The Market Value to Realized Value (MVRV) ratio checks profitability based on valuation. Litecoin’s 30-day MVRV is at 14.10%. This means that if all LTC holders sell, the average return would be about 14%. With most cryptocurrencies trading sideways, LTC might be overvalued.
Active Addresses and Network Activity are Decreasing
Santiment data shows that active Litecoin addresses in 24 hours have dropped to 401,000. More active addresses mean more unique transactions. A drop means fewer transactions. The number of active addresses has dropped from the last week of June.
If network activity keeps dropping, demand for LTC might decrease, leading to a price drop. But if buying pressure rises, Litecoin’s price could go up.
Conclusion
Litecoin’s recent price rise comes with risks of a fall. Metrics like NVT and MVRV ratios and active address data suggest Litecoin might be overvalued. Market conditions and trading actions will decide future price movements of LTC.
