The derivatives market for Litecoin has seen a spike in activity, reflecting heightened market participation and increased open interest.Analysts remain optimistic about Litecoin’s future, supported by increasing net inflows and potential catalysts such as the approval of Canary Capital’s Litecoin ETF.
Litecoin price has remained relatively in an uptrend since August. This movement is primarily due to having been in a consolidation trend and largely avoiding the hype of the crypto market for much of the past few months. However, the latest events appear to suggest Litecoin is changing the momentum.
What’s Next For Litecoin Price?
Data shows that November has been the month for bullish Litecoin investors to get back on their feet, per the CNF report. More relevant to the discussion, though, is that the liquidity dynamics in Litecoin appear to be changing. The level of net spot inflows in LTC just hit a high not seen since November 2021, which signaled the crest of the Litecoin price peak in the crypto rally at the time.
Thus, the surge in net inflows indicates increased interest in LTC yet again. Perhaps the most impressive observation is the behavior of the short-term holders. Just recently, it appears that Litecoin increased its Litecoin holdings by 31% over the last four weeks.
Blockchain analytics provider IntoTheBlock concluded that with this upsurge in spot inflows and interest by the short-term holders, the Litecoin price could be on the brink of a rally. The movement follows an all-rounded liquidity shift pattern observed across the crypto market currently with Bitcoin clocking an all-time high close to $90,000.
Activity has not just resurfaced at the spot market. According to Coinglass data, the Litecoin OI-Weighted Funding Rates reached a peak in the last six months in the derivatives sector. This means that LTC-linked derivatives have more activity. This open interest increase demonstrates Litecoin’s phenomenal volatility over the recent period. Whilst, the asset has been within its consolidation range since August in an ascending pattern.
LTC Price Sees Volatility
Litecoin printed strong volatility in the past few days with a price that shot up and fell hard in a bearish fake-out move before a strong demand propelled it to $82.78. It then dropped to $72.06 as it retreated back to its ascending channel. Such price action depicts a likelihood of shakedowns in big magnitude for both long and short positions.
In early November, Litecoin price showed strong demand beginning around November 6. At the time, LTC price saw six consecutive days of gains, evidencing an increasing appetite for long positions. By November 11, long positions were starting to outweigh shorts, tipping market sentiment toward upward momentum.
In liquidation terms, over the last 24 hours, $3.32 million in Litecoin positions were closed out across exchanges. Of that total, longs made up the majority with $3.19 million liquidated and $124,830 in shorts. This spread suggests the longs were shaken out during the pullback from the attempt at a breakout.
However, analysts remain bullish as the net inflow for LTC increases. Also, the hype around Canary Capital’s Litecoin ETF could add to the positive momentum, reported CNF. If approved, this ETF could bring in further retail and institutional influx, potentially propelling the LTC price toward new highs.