Litecoin (LTC) is once again at risk of massive sell off. During a market meltdown, coins that have little to no use case of their own are at much higher risk because not only do they risk a loss in value but they risk abandonment. During the 2018 crash, we saw the core Etheruem Classic (ETC) development team that had been working on the cryptocurrency from the very beginning finally abandoned the project citing financial difficulties. The daily chart for LTCUSD/BTCUSD shows that the ratio has once again declined below a key support. In fact, this time it risks a decline to much lower levels because we have yet to see Bitcoin (BTC) decline to the 200 Week EMA. If that happens, this ratio will decline to levels not seen since the creation of Litecoin (LTC).
This is by no means an ordinary development as it points to the strong probability of cryptocurrencies like Litecoin (LTC) experiencing unprecedented pain during the next downtrend. If Bitcoin (BTC) were to go down to $1,200 or lower, cryptocurrencies like Litecoin (LTC) would lose almost all of their value. Besides, when the market declines that low, it will stay that low for a long time because the hurt market confidence will take a lot longer to restore. This means that there is a high probability that the development teams working on cryptocurrencies like Litecoin (LTC) might find it very hard to operate. This is a serious threat to blockchain projects that don’t have a use case of their own. Litecoin (LTC)’s only use case is to be a faster and cheaper alternative to Bitcoin (BTC) for now. Bitcoin (BTC) could change that with upcoming upgrades but even if it doesn’t there are hundreds of coins that can do the same so what justifies Litecoin (LTC)’s valuation?
The daily chart for LTC/USD shows the price trading close to the 61.8% fib extension level. A break below this level would pull the price down to $30 and eventually much lower. If BTC/USD declines below $3,000 we can expect Litecoin (LTC) to decline below $20 potentially to a single digit price. As tempting as it may seem to “buy the dip” here, it is important to realize that the correction is not over yet even for short term.
Since the creation of Litecoin (LTC), many investors have been very comfortable buying just any cryptocurrencies without any regard for their merits or demerits. One of the main reasons LTC/USD was able to grow so much in such a short time was because of its low price compared to Bitcoin (BTC). It was cheaper and faster than Bitcoin (BTC) and many investors thought it could beat Bitcoin (BTC) to become the largest cryptocurrency by market cap or at least rise in value close to that of Bitcoin (BTC). However, times have changed now and after the pain the market inflicts during the next downtrend, investors will be a lot more careful buying coins based on their own merits and demerits.
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