On September 19, Litecoin’s price climbed by 3.85% to reach nearly $68.50, outpacing the overall cryptocurrency market, which gained 2% on the same day. Despite this, Litecoin has underperformed the broader crypto market throughout 2023. Much of the market’s focus this week is on the Federal Open Market Committee (FOMC) meeting concluding on September 20, where the Federal Reserve is expected to consider a pause in ongoing interest rate hikes. The anticipation of a rate pause has increased investors’ appetite for riskier assets, resulting in gains in U.S. stocks and most cryptocurrencies.
LTC/USD daily price chart. Source: TradingView
Dollar’s Decline Fuels Litecoin’s Rise
Simultaneously, the U.S. dollar has weakened against major foreign currencies, with its benchmark index down 0.5% for the week, including declines on September 19. Litecoin has maintained a negative correlation with the dollar since December 2021, indicating a tendency to move in the opposite direction. Therefore, as the dollar dips, Litecoin rises.
U.S. dollar index daily performance chart. Source: TradingView
Technical Rebound and Short Liquidations
Litecoin’s recent gains are part of a rebound trend that initiated last week, starting near a long-term ascending trendline support that has acted as a barrier against Litecoin’s declines since December 2018. This bounce has resulted in an 18.5% increase in Litecoin’s price over eight days.
LTC total liquidation chart. Source: CoinGlass
Additionally, Litecoin’s price surge led to short liquidations totaling around $477,300 on September 19, outweighing liquidations of long positions, which amounted to only $87,850. Short liquidations involve traders buying the underlying asset, contributing to the asset’s price increase.
Litecoin Price Outlook for Q3/2023
LTC/USD weekly price chart. Source: TradingView
From a technical perspective, if Litecoin maintains its bounce from the long-standing ascending trendline support, it could aim for its multi-month descending trendline resistance. This suggests a potential target price of $78.50 in the coming weeks, representing a 16.5% increase from current levels. Notably, $78.50 has served as both support and resistance in various months throughout 2023, coinciding with Litecoin’s 50-week exponential moving average.
