Cryptocurrency news site reports that approximately $70 million worth of LTC is set to be sold, potentially driving prices below $70. Network activity has also decreased, suggesting Litecoin may be overvalued.
Over the past seven days, Litecoin (LTC) has seen a 4.18% price increase to $74.64. However, all these gains could be erased if holders decide to confirm sell orders on exchanges.
According to data from IntoTheBlock, on-chain market depth on exchanges shows more coins stacked on the sell side. Demand is met with supply in trading, where asks are for selling and bids are for buying.
Litecoin holders are gearing up for liquidation. If LTC reaches $74.65, about 928,200 coins worth nearly $70 million could be sold.
In such a scenario, prices may drop to between $72 and just under $70. AMBCrypto has identified another indicator supporting potential price declines: Network Value to Transactions (NVT) ratio, which assesses the relationship between market cap and transaction volume on the network.
When NVT ratio rises, indicating market cap growth outpaces transaction volume, the network may be overvalued. Conversely, a decreasing NVT ratio suggests undervaluation, indicating a good buying opportunity.
Glassnode data shows Litecoin’s NVT ratio has surged recently, suggesting LTC may be currently overvalued relative to market conditions.
Therefore, cryptocurrency prices could decline in the short term. In addition to the above indicators, AMBCrypto also examines Litecoin’s Market Value to Realized Value (MVRV) ratio.
MVRV measures profit potential for holders relative to valuation. A high MVRV ratio suggests overvaluation, while a negative reading could present a good buying opportunity. As of now, Litecoin’s 30-day MVRV ratio stands at 14.10%, indicating an average return of around 14% if all LTC holders were to sell.
Looking at the broader market context, LTC may be overvalued, given most cryptocurrencies are trading sideways. Activity addresses on Litecoin have also been scrutinized.
According to Santiment, Litecoin’s 24-hour active addresses have dropped to 401,000. An increase in active addresses signifies more unique addresses engaging in transactions.
Yet, recent declines in active addresses on the network suggest otherwise. If this trend continues, demand for LTC may decrease, potentially forcing prices lower. However, increased buying pressure could lead to a price rebound for Litecoin.
