After the Federal Reserve decided to keep interest rates unchanged, the crypto market has maintained steady growth. Among these, Litecoin stands out in the altcoin sector, recording significant double-digit gains in just a few hours. This surge has impacted several on-chain metrics, suggesting that Litecoin’s price is currently overvalued. This could lead to strong selling pressure if LTC price struggles in breaking through resistance levels.
Litecoin’s MVRV Declines Despite Price Surge
Litecoin faced increased buying demand following rumors of a Litecoin-based exchange-traded fund (ETF). On Polymarket, a decentralized prediction market, crypto bettors have placed an 87% chance that the US Securities and Exchange Commission (SEC) will approve a Litecoin-based exchange-traded fund (ETF) this year.
The hopes among investors increased after the SEC began a public comment period for the proposed Canary Litecoin ETF. The public has 21 days from the announcement to submit feedback, which will help the SEC decide whether to approve the ETF.
Also read: Why Litecoin Price is Up Today: Key Factors Driving Its 14% Surge
After the comment period, the SEC has 45 days to make a decision, which can be extended to 90 days if needed, to approve, deny, or further review the ETF.
Due to this news, there’s an increased buying pressure in the LTC price chart. Data from IntoTheBlock indicates that the MVRV ratio for Litecoin is falling, even though the price of LTC is rising. Currently, the ratio is at 1.23, suggesting that the last realized value is nearing LTC’s market value.
A declining MVRV ratio amidst a price surge might suggest that although prices are increasing, the value being realized by holders does not support this price increase, indicating potential overvaluation.
Eric Balchunas, an ETF analyst at Bloomberg, highlighted that this is the first altcoin ETF to get this far, showing significant progress in the approval process. However, it’s still unclear if the SEC will speed up its decision or use the entire 240-day review period.
What’s Next for LTC Price?
Litecoin price has been facing increasing buying demand as buyers pushed the price from the low of $110 to a recent high of $134. Currently, buyers are holding the price above 23.6% Fib level to stabilize the momentum within a buying zone. As of writing, LTC price trades at $131.6, surging over 17.1% in the last 24 hours.
The rising 20-day EMA at $119 and an RSI over 69 suggest that buyers currently have the advantage. If LTC breaks and closes above the downtrend line, it could set off a rally towards $150, and possibly extend to $165.
On the other hand, if the price sharply reverses from the downtrend line, it means that sellers are still influential at higher prices. This could lead them to try pushing the LTC/USDT pair back down towards the 50-day SMA at $120.
