Here’s What’s Driving This Rally
On-chain data suggests developments in these two Litecoin indicators could explain why the cryptocurrency has seen its latest price surge.
Litecoin Volume & Social Dominance Have Surged Recently
In a new post on X, the on-chain analytics firm Santiment has discussed about how the underlying metrics of Litecoin have looked during the latest surge in its price.
There are two indicators of relevance here: the Transaction Volume and the Social Dominance. The first of these, the Transaction Volume, keeps track of the total amount of tokens (in USD) that are becoming involved in transfers on the LTC network.
When the value of this metric is high, it means the investors are participating in a high amount of trading activity related to the asset. Such a trend can be a sign that the interest in LTC is high right now. On the other hand, the indicator being low can suggest the investors may not be paying much attention to the cryptocurrency as they aren’t moving around any significant amount.
Now, here is a chart that shows the trend in the Litecoin Trading Volume over the last few months:
The value of the metric appears to have spiked in recent days | Source: Santiment on X
As displayed in the above graph, the Litecoin transaction volume has seen a surge recently, which implies activity on the network has gone up. So far, the indicator has set a peak of $3.97 billion, which is the highest level since June 2023.
Generally, a high amount of network activity leads to volatility in the cryptocurrency’s price. This emerging price action can take the asset in either direction, however, as the Transaction Volume only gauges the pure amount of transfers taking place on the chain and contains no info about the split between buys and sells.
In the current case, though, the spike in activity has been followed by a rise in the asset’s price, which suggests the investors have been participating in accumulation.
The second indicator in the chart, the Social Dominance, tells us about the percentage of the total social media discussions related to the top 100 coins by market cap that Litecoin alone is contributing.
From the graph, it’s apparent that the LTC Social Dominance has also seen a rise recently, with discussions related to the coin contributing around 1.1% of the sector’s total.
This suggests that the average trader is starting to pay attention to the cryptocurrency. Retail interest can help fuel rallies, but an excessive amount of it can be something to watch out for, as Fear Of Missing Out (FOMO) has historically led to tops in the price.
LTC Price
Litecoin had neared the $75 level earlier in the rally, but the coin appears to have seen a pullback since then as it’s now back at $72.5.
Looks like the price of the coin has been riding an uptrend in recent days | Source: LTCUSDT on TradingView
Featured image from Dall-E, Santiment.net, chart from TradingView.com
#Heres #Whats #Driving #Rally
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