Bitcoin continues the slow climb higher. We are now up by $29 since last Tuesday, a gain of 4.6 percent. Little brother Litecoin is also up, for a gain of over 8 percent this week.
Bitcoin Higher, Next Move Uncertain
Bitcoin is still climbing higher, now at $659.99 per coin. But as you can seen on the chart below, it hasn’t been a smooth sailing. We’ve barely made any gains during the past four days and on Sunday we saw a sharp fall of over $40.
While the medium-term and the long-term trends are bullish, the short-term one is still undecided. To restart the rally, the bulls will have to push BTC back above $744 on FXOpen ($795 on other USD exchanges).
On the other end, the breakdown below $540-$560 per coin on most exchanges and $522 on FXOpen would start a new trend lower. Below here, support can be found at the round $500 figure (a weak level) followed by the breakout point for the previous rally at $460 per coin.
We’re now only four days away from the halving. On July 9 at approximately 15:32 UTC the Bitcoin mining reward will drop in half, from 25 to 12.5 Bitcoins. This means that after July 9, the inflation rate will drop from 8% to 4% per annum.
You would think that this should boost the price of Bitcoin. But let’s take a look at what happened to LTC before and after its halving last year. Litecoin prices started climbing in May of 2015, almost four months before the projected halving date. By the start of June, the price of $1.63 was hit, then $3.93 at the start of July. We peaked at $8.64 on July 10, a full month before the projected halving date.
From here on out, it was down all the way for LTC/USD. Prices retraced the vast majority of the halving gains thereafter, hitting a low of $2.50 in late August. Litecoin closed the year at $3.44 above its pre-halving price but well below the year’s high at $8.64.
The main takeaway would be that these things tend to get priced in early and the actual event ends up being more of a ‘buy the rumor, sell the news’.
Litecoin Gains 8 Percent
Back to the present for LTC/USD! With the recent rally from $4.06 to $4.40 prices are nearing the potential breakout point. A decisive clearing of the $4.50 – $4.61 resistance area could end the current LTC downtrend. A breakout above $5.64 is needed to jump-start the new rally in prices.
Below the current prices we have support levels at the round $4 figure, followed by $3.78. Not far below here we have a support area from $3.50 to $3.61. A break below here could lead to more losses toward $3.30 per coin.