A relief rally by most cryptocurrencies on Wednesday was welcome after a dull week. As to whether the gains will be sustainable, time will tell. However, Litecoin (LTC/USD) gains were more promising, setting the token among those that could end the year in the green.
Litecoin saw increased social interest on Wednesday, with the cryptocurrency gaining by 27%. In the last one week, LTC has added 35%, setting it on course to higher prices. The latest performance happens amid positive expectations around LTC’s supply dynamics.
The gains in LTC come around eight months to its third halving event, expected in July 2023. Market analysts are reading the same trend in the run-up to the third halving event. But what is it exactly?
The mining reward halving or simply halving event occurs every four years on the Litecoin blockchain. During the event, a programmed code reduces rewards or payouts to miners by half. In the next event, the rewards will be cut from 12.5 LTC per block to 6.25 LTC. This has the effect of reducing the inflation of LTC.
If history is to repeat itself, then the LTC price will behave as it did in the 2015 and 2019 halving events. Those are the times the cryptocurrency broke from a prolonged downtrend to recover sharply, months ahead of the event.
While the pre-halving rally could be a bit speculative, Santiment data reinforce increased buying of LTC. Whales have scooped over $42.4 million worth of LTC in the last two weeks. That comes after earlier in the month, MoneyGram launched a service letting trade and hold crypto assets. The allowable digital assets were Litecoin, Bitcoin, and Ethereum.
LTC hits the May highs in a bullish push
On the daily chart, LTC is on a clear bullish momentum after pushing above the $64 resistance. The resistance has been crucial, stopping bulls from taking LTC higher since May. An RSI of 71 implies that LTC could be slightly overbought.
Should you buy LTC?
A break above $64 welcomes a bullish short- and medium-term run. However, with the overbought conditions, investors would be better off buying on a retracement towards $64. The next potential LTC price target lies at $95.