The US Dollar index jumped to its highest level in 5 months, causing the rally of the US economy. Cryptocurrencies like Litecoin have an inverse relationship with the USD, causing their prices to remain under intense pressure on Tuesday. Litecoin dropped to a low of $62, hovering close to the bottom since December 2019.
The events of last week have caused the prices of cryptocurrencies to come under scrutiny. On Wednesday, the SEC suffered a major blow when Greyscale won a major case in the US. The victory implies that the SEC is likely to approve the launch of spot Bitcoin ETFs, causing the prices of currencies like BTC and LTC to jump. However, their rallies were short lived after the SEC decided to delay decisions on funds from companies like Blackrock and Invesco.
Litecoin buyers are closely monitoring these events due to the close correlation that exists between BTC and LTC. As Litecoin was created from Bitcoin, if Bitcoin succeeds in having a spot ETF, there’s a high chance that a Litecoin ETF will follow shortly afterward.
The strong performance of the US Dollar is also affecting the price of Litecoin. The Dollar index has jumped to $104.5, which is the highest level in more than 5 months. Its surge is due to the strength of the American economy, with recent data showing that countries like China and Germany are struggling. At the same time, the Fed has hiked rates to the highest level in more than twenty years. This has caused investors to shift from crypto assets like Litecoin to staple items like cash market funds and CDs.
The daily chart shows that Litecoin value has been in a downward trend in recent weeks. This sell-off accelerated after the Litecoin halving momentum waned. It has moved below all moving averages and is now forming a bearish pennant pattern, which is normally bearish. Therefore, Litecoin price is likely to have a bearish breakout as sellers target the next support level at $55.
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