Litecoin price consolidated above $110 on Tuesday after the crypto market crash on December 9 triggered a 20% correction. According to derivatives market data, LTC bulls deployed $10.8 million worth of leverage near the $100 support level. Relative Strength Index (RSI) indicator on LTCUSD 4-hourly chart shows improvement in market momentum
Litecoin price fell below the $110 level on Tuesday, dropping 20% in a frenetic 24 hours as rising geopolitical risks caused volatility across global crypto markets.
Derivatives market data shows that LTC bulls are deploying significant leverage around the $100 support level.
Will LTC prices fall further or will there be an early rebound?
Litecoin price drops 20% due to cryptocurrency market crash
After a strong start to December, the global cryptocurrency market has entered a sharp downtrend over the past 48 hours, with Litecoin (LTC) emerging as the leader in losses.
According to recent global news reports, the cryptocurrency market crash may be related to the rising geopolitical crisis in the Middle East and Asia.
Litecoin Price Action (LTCUSDT)
The chart above shows that the price of Litecoin has fallen 20% in the past 36 hours, falling from $135 on Monday to a level of $108 at the time of writing.
This made Litecoin one of the biggest losers of the day, with many overleveraged, even as the P2P payment network posted a chart-topping 46% gain in the first four days of December. The trader didn't notice.
Bulls leverage support around $100 to deploy $10 million
Bullish traders who experienced 20% losses are now taking strategic actions to intervene and avoid a possible break below the $100 psychological support.
Supporting this stance, the current trends observed in the LTC derivatives market show that the bulls are forming a support cluster around the $100 price level.
Coinglass Liquidation map data tracks the total value of active leveraged positions listed around a particular price level.
Litecoin Liquidation Map, December 10th | Source: Coinglass
At first glance, the chart above reflects the overall bearish sentiment in the market, with leveraged short LTC positions worth $118.9 million, far exceeding the active long contracts of $17.63 million. .
However, if we zoom in on the chart, we can see that the bulls have increased over 52% of their current leveraged positions around the $100 level.
If traders deploy an overwhelming amount of leverage at a particular price point, it is an indication that many traders are likely to book significant losses if the price falls below that level.
Given current trends, Litecoin traders with active leveraged long positions are likely to make quick cover purchases in the spot market to prevent a fall below the $100 resistance.
If this scenario plays out, the surge in demand from cover purchases could delay the price adjustment phase in the coming days.
And if market sentiment regarding geopolitical risk factors weakens, it could effectively set the stage for the next Litecoin price rebound.
Litecoin Price Prediction: Bears continue to dominate, putting pressure on the $100 support level
Litecoin price trend remains in bearish territory after market liquidation caused a rapid 20% size reduction. However, the bulls are currently making strategic moves to maintain the $100 support level.
Technical indicators on the LTC/USD 4-hour chart also support this somewhat optimistic outlook. First, the parabolic SAR indicator is located at $112, slightly above the current price of $110, indicating significant bearish momentum.
Litecoin price prediction
However, the lower band of the Donchian Channel shows clear support at $100, forming an important defensive zone with leveraged traders concentrating their buying interest.
What's more, the RSI recently rose above 30 from the bottom, indicating an improvement in momentum that could attract strategic buyers looking to re-enter the market at the bottom.
If the bulls are successful in defending $100, the next resistance level lies at $112, which coincides with the upper band of the Donchian Channel.
A decisive breakout of the $119 level will signal the beginning of a rebound.
Conversely, failure to sustain $100 could result in a fall towards the next support at $95, which could lead to even larger losses on a weekly basis.
