On March 20th, Litecoin experienced an 8% increase, jumping from $77 to $86 within a single day. An unusual trend in network transactions indicates a potential upward movement for Litecoin (LTC), potentially reaching $100 in the upcoming days. This week, a significant surge in large LTC transactions, coupled with an announcement from Coinbase, has emerged as key factors driving bullish sentiment for Litecoin’s price.
Coinbase Announcement Sparks Surge in Litecoin Price and Futures
Coinbase derivatives made public their intentions to introduce futures contracts for Dogecoin (DOGE), Litecoin, and Bitcoin Cash (BCH) on March 20. As outlined in Coinbase’s filing with the Commodity Futures Trading Commission (CFTC), the exchange is targeting an April 1 launch for these three pairings.
Analysing the recent price movement of LTC, investors have responded with optimism to this announcement. They anticipate that the forthcoming listing on Coinbase could stimulate fresh capital inflows and contribute to the further expansion of LTC’s global adoption.
Following the Coinbase futures listing announcement, Litecoin (LTC) saw a significant 13.5% surge within a day, reaching $86 and contributing more than $800 million to its market capitalization.
Despite this surge, recent on-chain data reveals a notable uptick in substantial transactions within the LTC network, occurring even during periods of price consolidation.
Litecoin’s Average Transaction Size Surges by 200% in the Past 60 Days
During the fourth quarter of 2023, Litecoin faced challenges in garnering market demand due to bearish sentiments prevailing after the third halving event on August 2. However, since the beginning of the new year, the network seems to have defied this downtrend.
The IntoTheBlock chart below illustrates the historical trends of average transaction sizes on the LTC network. This metric serves as a proxy for assessing the level of market demand and the participation of significant investors in the market.
Following a downtrend in demand during Q4 2023, the LTC market experienced a turning point in late January 2024. As illustrated above, on January 22, the average Litecoin transaction size stood at $2,026. Since then, LTC investors have consistently escalated trading activity.
As of the latest data recorded on March 20, the average transaction size has surged to $17,594, marking a remarkable 768% growth over the past 60 trading days.
This surge in average transaction size carries significant implications for strategic investors for several reasons.
Firstly, the substantial increase signals heightened investor confidence and engagement within the LTC market. This surge in activity suggests a growing interest and optimistic sentiment regarding LTC’s short-term price outlook.
Secondly, the notable growth in transaction size indicates a rise in larger-scale transactions, suggesting increased participation from institutional traders and high-net-worth investors. Institutional involvement typically brings greater stability, liquidity, and long-term support to the market, reinforcing the overall bullish sentiment for LTC.
Additionally, after lagging behind the market during the initial stages of the rally in Q4 2023 due to post-halving selling pressure, strategic traders may view Litecoin as undervalued. This perception could prompt further capital inflows, potentially propelling LTC’s price above $100 in the weeks ahead.
Considering the market’s response to Coinbase’s introduction of LTC futures trading and the notable 768% surge in average transaction size, Litecoin seems primed for a breakthrough beyond $100.
The ongoing trends in Litecoin derivatives markets reinforce this optimistic stance. Illustrated by the red trend line in the chart, bullish traders currently hold sway, their long contracts surpassing the active short contracts.
Nevertheless, the path of the Litecoin price rally might encounter resistance around the $90 territory in the short term.
If LTC prices surpass $89.90, bears will lose over $9.6 million in liquidated positions. If they opt for mass sell-offs to mitigate further losses, a pullback in LTC price could ensue.
However, suppose transaction sizes continue to increase, as seen in the past 60 days. In that case, bullish momentum may strengthen enough to counteract selling pressure and propel Litecoin’s price beyond the $100 mark as anticipated.
Conversely, in a market downturn scenario, Litecoin bulls could regroup to stabilize around the $80 support level, fostering a period of steady consolidation.
