Litecoin (LTC) is putting on a show today amid news a group of developers may seek to fork its blockchain, the fifth-largest by total value.
The cryptocurrency was last seen changing hands at $216, a one-month high, according to data service CoinMarketCap. Overall, LTC has appreciated by 33 percent in the last 24 hours, up over 100 percent from the Feb. 6 low of $106.94. Further, with the move, litecoin’s market capitalization has jumped above $10 billion for the first time since Jan. 29.
Still, the reasons for the move may give investors pause.
LTC appears to be edging higher due to news of an upcoming fork called “Litecoin Cash,” which is promising new tokens to existing holders at block 1,371,111. For every 1 LTC held at block 1,371,111, holders will receive 10 “LCC,” according to the official website.
However, there is a notable contingent that is warning about the new cryptocurrency.
Litecoin founder creator Charlie Lee and the litecoin community have dismissed the project, calling it a “scam” meant to confuse litecoin owners. Bitcoin similarly boomed on the release of a rival blockchain called bitcoin cash last year, though there were perhaps more stark differences between the two technologies, both propelled by competing ideologies.
Closer analysis shows the LTC price increase has been bolstered by strong volumes from Coinbase’s GDAX exchange, a sign less-savvy consumers may be active in the market.
However, questions about the fork aside, technical charts indicate the news may be enough to extend a rally in the flagging market.
Litecoin chart
The above chart (prices as per Coinbase) shows:
- LTC has breached the falling trendline resistance on the back of a sharp rise in volumes. A high volume breakout indicates the rally is here to stay.
- Short-term momentum studies indicate bullish setup: 5-day MA and 10-day MA are curled up in favor of the bulls.
- The relative strength index (RSI) is above 50.00 (in the bullish territory) and on the rise, indicating scope for further gains in LTC.
- Meanwhile, the 50-day MA is sloping downwards in favor of the bears.
View
- A close today (as per UTC) above the trendline hurdle would signal a bearish-to-bullish trend change and allow for a stronger rally towards $300.
- The RSI on the 1-hour and 4-hour chart shows overbought conditions, hence a minor pullback could be seen. That said, the dip would be short-lived as short-term momentum studies are biased bullish.
- Only a daily close (as per UTC) below $142.26 (Feb. 11 low) would signal a bullish invalidation.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
Litecoin image via Shutterstock