On-chain data suggests that Litecoin potentially has significant resistance ahead, making it tough for the LTC price to rebound.

Litecoin has a vast wall of supply waiting in levels just ahead of it

As user X pointed out Kamikaze trader using data from market intelligence platform IntoTheBlock, a vast number of LTC investors have purchased at future levels.

Below is a chart from IntoTheBlock that shows the distribution of LTC addresses based on the price at which they last purchased their coins online.

Here, the size of the dot correlates with the amount of cryptocurrency purchased in the corresponding price range. As you can clearly see, the range from $81.64 to $83.88 has a vast dot associated with it, which means that a vast number of tokens were purchased while the asset was trading there.

Specifically, 432,070 addresses purchased approximately 6.67 million LTC during this range. This amount is worth over $534 million at current exchange rates.

What significance could this have for Litecoin? In chain analysis, the strength of any level as support or resistance comes down to the number of coins acquired at that level. Therefore, this bulky LTC range with investors could potentially impact the cryptocurrency upon retesting.

The reason for this theory is that the cost basis is an essential level for any holder, so it may be more likely to show some reaction when a retest takes place. The greater the number of investors who divide their cost basis within a narrow range, the stronger this reaction would be.

What kind of reaction a repeat test would produce depends on whether it comes from the top or the bottom. Investors who experience losses just before a retest (i.e. one that takes place from the bottom) may be inclined to sell because they may be afraid that the price will fall again soon. Breaking even would mean at least avoiding losses.

On the other hand, holders of green may have decided to take further risks before the retest, believing that the price would rise again.

Therefore, levels below the current price may be support points, while those above resistance may be points. Since Litecoin has a noticeable supply wall at levels just above current levels, it is possible that its retest could trigger a selling reaction.

Now it remains to be seen whether this bulky range would hinder LTC’s recovery should the cryptocurrency rise to test again.

LTC price

Litecoin is currently just below the supply wall, trading at around $80.

Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com