Litecoin price recovery stalled this week after defying gravity amid the ongoing crypto sell-off. LTC retreated to a low of $75.60, which was a few points below this month’s high of $84.47. It remains about 60% from the lowest level in November.
LTC hashrate slumps
Litecoin has been in a strong bullish trend in the past few months as demand for the coin remained at an elevated level. Its rally was surprising because of the performance of Bitcoin, Ethereum, and other large-cap cryptocurrencies. For example, BTC has remained slightly above the year-to-date low of $15,400.
Litecoin’s rally coincided with the strong performance of its hashrate. In November, the hashrate rose to an all-time high of 633 TH/s, which was higher than this year’s low of 328 TH/s.
Hashrate is an important data in proof-of-work cryptocurrencies because it helps to measure the health of the network. It is used to determine the number of guesses that are made in the network per second.
This week, however, Litecoin price has dropped amid rising concerns about the crypto and stock market. The decline is notable since it happened because of the dropping hashrate. According to Coin Wars, the hashrate has dropped to 537, the lowest level since November 21.
Why LTC is dropping
There are other reasons why LTC has dropped. First, it has declined because of profit-taking in the coin since it rose by over 65% from its lowest point in November. This is a common situation across the broader market.
Second, it slumped because of macro levels. On Friday, data by the US showed that the American economy added over 282k jobs in November. In the same period, the unemployment rate remained at 3.7%.
And on Monday, data showed that the American services sector remained in an expansion level. Therefore, investors believe that the Federal Reserve will likely continue hiking interest rates in the coming months.
Third, it seems like most crypto investors have reached panic levels, pushing them to sell their coins. The evidence is that the number of Bitcoins in exchanges has dropped sharply in the past few weeks.
While some of these coins have moved to external wallets, data suggests that the number of coins in self-storage has not grown by much. This suggests that investors are still fearful about the crypto market. Indeed, the crypto fear and greed index has slumped to the fear level of 23.