Litecoin (LTC) Price Prediction for 2021: Is Litecoin Keeping its Safe Haven Status?
Skerdian Meta • 7 min read
Litecoin (LTC) – Forecast Summary
|Litecoin Forecast: H1 2021|
Price: $350 – $400
Price drivers: Second wave of COVID-19,Technical pullback, Safe haven retreat
|Litecoin Forecast: 1 Year|
Price: $500 – $600
Price drivers: Post COVID-19, Hawkish central banks, USD reversal, Positive risk sentiment
|Litecoin Forecast: 3 Years|
Price: $1,000 – $ 2,000
Price drivers: Economic Recovery, Post coronavirus, Tighter monetary policies, Higher bond yields
Litecoin joined the big crypto party a little late, towards the end of December 2020, but it has made up for the late entry, having broken above $ 247 by the middle of February. Although it gave back almost a third of the value during the major retreat in the last week of February, which seems to have ended by the way, but Litecoin trades way off the lows now, back above $ 200. It turned bullish in November, but the main gains came from December until the first week of January. Although, it was lagging again in the first two weeks of February. But the bullish momentum resumed again with comments from Elon Musk and Litecoin seems to be heading for $ 250 and $ 300 soon, despite the slight pullback on February 22, on Musk’s comments about Bitcoin once again. So it remains bullish nonetheless, as it continues to approach previous highs after bouncing off the 50 daily SMA.
Litecoin, which started life in October 2011, as the second cryptocurrency to challenge Bitcoin, remains a top 10 altcoin in terms of market cap, which at the moment stands at around $ 9 billion. But it is pretty dynamic, so we can expect it to change continuously. It was launched at $ 0.1 and remained quite low, but at the end of 2017, it surged to $ 420. Then, we saw another attempt at turning the Litecoin price bullish in 2019, which took the price to $ 145, but the technicals brought it down, and kept it there until the second half of 2020, when the second “gold rush” for cryptos started. Litecoin has benefited greatly from the revived demand for digital currencies, and we saw it climb to $ 185 in January 2021. However, it began retreating in late January, but it has found solid support at the 20 SMA on the daily chart, which has been holding since January 11 and now it’s off to new highs.
Recent Changes in the Litecoin Price
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Factors Affecting Litecoin
Similar to Bitcoin, Litecoin is a cryptocurrency with a long-term projected growth, as the Litecoin team claims, although many other crypto developers claim the same. But Litecoin, as a digital currency, was the catalyst that got the entire cryptocurrency industry going. The transaction speed was Litecoin’s main advantage over Bitcoin. It placed Litecoin in the crypto market as a strong financial asset with long-term growth potential, which is materializing with the new developments.
Litecoin announced a shift from proof-of-work to proof-of-stake in June last year. This increases the scalability and makes it cheaper to mine, which attracted Flare, encouraging it to integrate with Litecoin and make Litecoin transactions possible through the Flare Network, while giving Litecoin holders free Spark (Flare) tokens. PayPal has also added Litecoin as a means of payment, which makes this crypto increasingly attractive for everyday use, hence the 450% increase in value since October 2020, up to the top level of $ 185, according to my broker. However, the sentiment in the crypto market has turned softer as we head towards February, and Litecoin is now facing the 50 SMA on the way down, after reversing earlier this month.
Litecoin Price Prediction for the Next 5 Years
The cryptocurrency market has turned massively bullish since October 2020. The value of the crypto market has increased several times within the scope of several months. This is due to the uncertainty regarding the economic and political situation around the globe, which has given digital currencies safe haven status. Bitcoin surged above $ 40,000 earlier this month, with Ethereum following suit, suddenly taking all the attention in financial markets. While certain shares, like Amazon and Tesla, have performed extremely well in these times of COVID-19, the crypto market has outperformed everything. In this article, we will take a look at the factors that are keeping the LTC/USD bullish, and the projections for the future.
Will Litecoin Remain a Safe Haven?
Cryptocurrencies have received a lot of attention from investors recently, as the material world becomes too unstable. They have been at the center of attention before; towards the end of 2017, the attention of the financial world turned to the cryptocurrency market for the first time. Until then, cryptocurrencies were just some new internet thing, but after that surge, they earned recognition as a separate market, while the recent surge in late 2020 and January 2021 is earning them the status of an important market at the very least, and a safe haven for most traders and investors.
Digital currencies used to be considered a high risk market, which attracted traders who were looking for high return-high investments, considering the instability of the market, the high volatility and the large spreads. Traditional precious metals, like gold and silver, which once acted as safe havens, retained this status until August last year. But they have been declining since then, even with the USD on a strong downtrend. Due to the reshaping of the global economy, and possibly also global politics, nothing is safe to buy and hold, as a way for investors to store their cash. As a result, cryptocurrencies look safer now, given their decentralized and anonymous nature.
As a result, they have been acting as safe havens since October 2020, attracting funds from large investors and businesspeople/companies. Bitcoin has been leading the surge, but Litecoin joined the party in November, and Ethereum is still keeping the party going for cryptos, as it keeps making new highs. However, the surge in Litecoin stalled at $ 185, which is a long way from the top figure of $ 420 that it achieved in December 2017. In fact, the price has turned bearish since January 10, and it is now trading at $ 120s. With all this volatility, going up and down 30-40% in just a few days, is hard for it to keep its safe haven status. But, after all is said and done, Litecoin is still worth three times as much as it was in October last year, so the safe haven status remains.
Fundamentals and Recent Developments for Litecoin
There have been quite a few developments in Litecoin over the past year. It saw a rise in activity in September last year, when the new MimbleWimble update was launched. In August last year, Litecoin had over 92,278 active wallets in 24 hours, according to Foundation Director David Schwartz, who said that the cryptocurrency, Litecoin, was more than both Bitcoin Cash and BSV combined, at 90,446. This indicated that Litecoin was resurging in terms of investment, transactions and transfers. The launch of MimbleWimble brought privacy features to Litecoin. It was implemented in September and directed by the lead developer, David Burkett. The new MimbleWimble will provide the benefit of privacy and enable faster transactions on the Litecoin Network. Therefore, MimbleWimble will have a different verification mechanism than Bitcoin.
Besides this, the Creator of Cardano and CEO of IOHK, Charles Hoskinson, revealed his intentions to establish cooperation with the creator of Litecoin, Charlie Lee. He sent his intentions via Twitter, stating that he loved the idea of a cross-chain communication between Litecoin and Cardano. He added that there were many possible ideas to be discussed. In response to this, the creator of Litecoin replied with the word “sure”, indicating that he approved of the idea of working together. Therefore, it is expected that the relevant persons from both foundations will get together to discuss the matter soon.
And not only Cardano is planning to partner with Litecoin; Flare Networks is also planning to integrate with them. The aim is to bring decentralized financial services (DeFi) to their currency, allowing LTC “to be used trustlessly on Flare with Ethereum style smart contracts” and promising “interoperability and composability” for it. The company, Flare Networks, announced earlier this month that they will airdrop Spark (FLR) tokens to Litecoin holders in advance of their mainnet launch later this year. We mentioned earlier that PayPal has also adopted Litecoin, starting from early this year. According to them “The migration toward digital payments and digital representations of value continues to accelerate, driven by the COVID-19 pandemic and the increased interest in digital currencies from central banks and consumers.”
Technical Analysis, Litecoin – Will LTC/USD Bounce off the 50 SMA?
As we mentioned above, Litecoin started life at $ 0.10 in 2011 and was trading at around $ 5 until 2017, when it started to turn bullish, taking off towards the end of that year, and reaching $ 420. After the big surge came the big crash, and Litecoin fell back down to $ 22, after a short-lived bounce off the 20 SMA (gray) on the monthly chart below. In 2019 buyers attempted to turn Litecoin bullish again, and they managed to push the price higher to $ 45, but couldn’t break the 20 SMA despite piercing it briefly. So, this moving average turned from support into resistance and rejected the price again early in 2020. But it surged towards the end of 2020 and at the beginning of 2021, although the current January candlestick looks like an upside-down pin, which is a bearish reversing signal after the strong bullish move. So, let’s wait and see how this candlestick closes.
The 20 SMA will probably turn into support on the monthly chart
On the weekly chart below, Litecoin formed a resistance at $ 185 in May 2018, which seems like it is holding again, after rejecting the price earlier in January 2020. A base has formed in the low $ 20s, which has acted as support. Moving averages, such as the 100 SMA (green) and the 200 SMA (purple), provided some resistance for Litecoin, but they were broken in November 2020 and turned into support immediately, suggesting further bullish momentum, which came in the following weeks. But the resistance at $ 185 held, and now the price is turning down. The first bearish candlestick was pretty big, while the other two look quite small, so sellers are finding it hard to push lower, which is another bullish signal.
Let’s see how far Litecoin will retreat
On the daily time-frame, the 200 SMA (purple) was providing support for this digital currency in September, when the price was still trading sideways. But the surge began and the smaller period moving averages turned into support, with the 20 SMA (gray) and the 50 SMA (yellow) doing so in December 2020. The 50 SMA turned into support again in January 2021, and we saw a bounce higher. But after an upside-down pin candlestick, which indicated a bearish reversal, the price returned back down and retested the 50 SMA. The 50 SMA held again, but eventually got broken towards the end of January, which is a bearish signal. However, the Litecoin is still trading above the low from the earlier decline in January, so until that low gets broken, the situation still remains bullish.
The door is open for further declines after the break of the 50 SMA