- Tailspin appears to be over but the volatility is still high.
- “…the alt-coin correction index does seem to suggest this latest downdraft is actually a tactically positive signal for alt-coins,” Tom Lee.
Litecoin recently traded near $70.00 after the Bulls staged a sustained recovery move from the fall in August. However, the bullish trend was caught unawares in the declines mid-this week. The bears mulled on the bulls as investors sold on news that Goldman Sachs was not opening a crypto desk. By the way, the news turned out to be FUD but the damage had been done already.
The crypto tumbled like a stone in the air from the monthly high approximately at $69.50. The declines extended below $62, and $60 support and embraced a pit stop at $54.00. Tailspin appears to be over but the volatility is still high. LTC/USD recovered to test $58.00 resistance but corrected lower again. The support established at $55.00 is strong enough to hold towards the weekend trading but the stronger support at $54.00 will stand ground if the ongoing bullish trend reverses.
The 100 simple moving average is preventing gains as the initial resistance at $56.56 while the 50 SMA on the same chart is a hurdle at $57.00. The ultimate resistance is at $60.00 in the medium-term but the bulls are ready for a battle to revamp the trend towards $70.00.
Thomas Lee, the co-founder of the research firm Fundstrat released results of what the firm refers to as “altcoin correction index.” This tool measures the percentage of the altcoins that have shed off 70% of their value since the all-time high in 9 months. The research tool has shown that 97% of these altcoins has decreased 70% from the all-time high.
“CRYPTO: 2/ Back in 2014, when this figure hit 87% (all-time high back then, and there were 349 tokens with actual trading volume back then), this was followed within 1 week by a mini alt-coin rally. Alts saw a 2.7X gain (nearly a triple) in 7 weeks,” Thomas Lee wrote on Twitter.
“While we recommend sticking with #BTC (etc), the alt-coin correction index does seem to suggest this latest downdraft is actually a tactically positive signal for alt-coins.”