Litecoin Price Correction Sparks Undervaluation Debate Amid Growing Mining Industry
Litecoin: Undervalued or not?
Litecoin (LTC) has experienced a price correction in the recent past, which has led some investors to question whether the cryptocurrency is currently undervalued. After a brief rise to nearly 80 US dollars, Litecoin underwent a price correction attributed to the bearish market. But is Litecoin actually undervalued, even after this price correction?
Litecoin’s Difficult Week
The past week has been difficult for Litecoin, as it recorded a significant price drop on the charts. According to CoinMarketCap, LTC’s daily chart was green, with the cryptocurrency appreciating by 1.5% within 24 hours. At the time of writing, it was trading at 73.16 US dollars, with a market capitalization of over 5.4 billion US dollars. Given the ongoing price correction, should investors expect LTC to be undervalued?
Litecoin’s Reserve Risk
To assess this, LTC’s reserve risk was examined more closely. If confidence is low and the price is high, then the risk or reward at this point is unattractive (reserve risk is high). According to this definition, Litecoin’s reserve risk recorded a rise on the charts – a sign that it was overvalued.
Analyst Opinion
On the other hand, Shan Belew, a popular Litecoin analyst, suggested that LTC is undervalued. According to him, LTC remains undervalued as long as the price stays below the white lines (as visible in the tweet).
Outlook
To better understand investor sentiment, LTC’s social metrics were also considered. These showed that LTC’s popularity has declined, as evidenced by the decrease in its social volume. Its weighted sentiment also fell in the last week, indicating that negative sentiments dominated the market.
Forecast for the Near Future
A look at the daily chart of the blockchain suggests that Litecoin might experience a bearish crossover in the near future. Both LTC’s Money Flow Index (MFI) and the Chaikin Money Low (CMF) recorded declines, increasing the chances of a price drop in the coming days.
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A Thriving Mining Sector
Despite the volatility of the crypto price, Litecoin’s mining industry grew. This is evidenced by the fact that its hashrate recorded an uptrend after a downtrend on December 4. At the time of writing, LTC’s hashrate stood at 859.48 TH/s. As the hashrate showed, Coinwarz’s data also indicated that Litecoin’s mining difficulty remained relatively high, with a value of 28.62 M.
Sources: CoinMarketCap, Glassnode, Santiment, TradingView, Coinwarz
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