Litecoin [LTC]: What does this metric tell us about miners’ incentive to sell
Litecoin (LTC)’s bullish exercise has risen because the begin of the month. It managed to get well again above $60 after ending August on a bearish notice. Quite the opposite, nevertheless, new observations appear to point that it may be about to expertise one other slip beneath the $60-level.
Litecoin is among the few cryptocurrencies that operates on a proof of labor consensus mechanism. Miner flows have up to now proved to be a big sentiment driver influencing worth motion. Any incentive for miners to promote would thus act as a helpful indicator of potential incoming bearish stress.
The Puell a number of is among the indicators that will assist establish cases the place miners are incentivized to promote. This, as a result of the metric signifies the extent of miner profitability at any given level.
Litecoin’s Puell a number of simply concluded final week with an uptick to its highest worth within the final 30 days.
Supply: Glassnode
The excessive Puell a number of for LTC indicated that miner profitability is at present excessive and this will likely encourage them to promote.
Litecoin’s dormancy has additionally been close to the decrease month-to-month vary, with the identical registering some exercise within the final 3 days. Curiously, this coincided with a resistance degree retest after final week’s rally.
Supply: TradingView
Litecoin’s 4-hour chart highlighted another excuse for a possible upcoming retracement. It briefly grew to become overbought after a strong bull run within the final 4 days. Moreover, the MFI indicator recommended that it has already been seeing some promote stress.
LTC’s on-chain metrics additional validated the growing promote stress expectations.
The MVRV ratio has kicked off the brand new week on a pivot, confirming that profit-taking is going on. It additionally appeared to disclose decreased profitability for consumers coming into the market close to the latest prime.
Supply: Santiment
The sharp drop within the realized cap metric is affirmation {that a} substantial quantity of shopping for stress is going down close to the latest prime.
Conclusion
The aforementioned Litecoin-centric observations highlighted the potential for a sizeable short-term retracement in the direction of the beginning of the week. Merchants also needs to contemplate opposing potential outcomes, such because the probability that the brand new week might deliver forth a bullish sentiment shift. This could delay any potential draw back, giving solution to the bulls.
Litecoin’s newest uptick has up to now demonstrated friction close to the $64 short-term assist. This may be considered as proof that LTC won’t be prepared for a breakout on the charts.
