Litecoin 2013 Bubble Analysis & 2017 Forecast

in #bitcoin4 years ago

Dear Steemit Community,

I am a pure Technical Trader relying on Price Action, though I am also taking into consideration fundamental reasons. I have analyzed the 2013 Bubble indepth and would like to share my insights with fellow traders. The reason I post it here, not in crypto reddit is that the crypto community is dominated by trolls and rarely able to discuss these things in a serious manner. So be welcome to comment and discuss.

First lets start with a picture of the 2013 bubble:

The reason why I am focused on the ratio is that when it turns into an uptrend, things tend to escalate quickly. As seen in the image, we had a prolonged downtrend defined by a longterm daily trendline which got broken on 2013/11/03 for the first time, however dipped below quickly after that. For technical traders, the break of a longterm trendline is a first indication a potential trend reversal. The second indication would be stronger bull bars than bear bars which has been observed in the period from 2013/10/23 to 2013/11/18 where another strong push up occured. This was also a second break of the trendline after the first one has failed, indicating that buyers are increasingly eager to enter early for a potential major trend reversal. After closing above the trendline it built a higher low after a higher high. If you are not a very risky trader you would have taken the secure entry when the reversal is confirmed with another higher high above 0.016. If you would have entered this trade, you could have taken profit two days later at 0.05 with a 312 % profit. Although this is highly hypothetical because determining the top of such a quick move is quite difficult to manage. Here is a visualization:

I would like to stress if you would have entered a position very early at the bottom of the trading range, after it broke the trendline for the first time and the appearance of stronger bull bars, your profits would be double compared to the "secure" entry at 0.016.

Now things get very interesting. Below you see a chart of LTC/BTC today.

Well, obviously something is going on. If you compare the chart you can't deny there are some similarities. Let me point this out in another visualization:

So basically we have the exact same conditions like in 2013. We had a 1st break of the longterm trendline, then a dip below. We got a 2nd break of the trendline with much stronger bull bars than bear bars. We already had a Higher High. Basically everything is there for a major pump up, except a Higher Low. Now consider following things: We had a strong daily reversal bar at 2016/12/23 which was triggered with high volume. We got another push up through the trendline at 2017/01/09. Currently if these signals are valid, the lower end of the trading range will be protected. In addition to that we retest the trendline from above, adding to support. The volume on the last selloff was poor. To me, this is the last sellers being pushed out of the market (which will drive the price higher later).

Now that is the technical side of things, although I stress this is solely my personal view based on trading experience. Lets add some fundamental reasoning for a potential pump, and this is where things get interesting a lot. First of all lets have a look at the current hashrate:

At the end of November LTC broke its hashrate ATH and has been rising sharply since then, without that being reflected in price until now. In my understanding, the higher the hashrate, the higher the security and capability of the network. BTC has the highest hash rate, hence it is most valuable. Therefore in my humble opinion hashrate = value of the network. Considering that LTC is roughly 2 1/2 years younger than Bitcoin it is obvious that the hash rate cannot be equally high at this point. However LTC is starting to generate a massive surge in hash rate which will likely significantly increase in the upcoming months and years. Again, this is not yet reflected in price.

Of course there is another fundamental reason why LTC could see massive gains in 2017, and that is a potential Segwit activation before BTC. Although LTC currently has no blocksize issues, it will benefit from issue solution included in Segwit (which is more important than the blocksize increase). Hence the activation of Segwit (which needs only 75% of miner support compared to 95% in BTC, with the latter being absolutely unrealistic IMO) would give LTC a prime advantage and a strong fundamental reason for a rally.

When comparing LTC to BTC I cannot understand how the majority of traders are so bearish on LTC, considering that it has 4x the speed, more capability, no current blocksize issues and no political drama. Therefore lets get to the very last part of this indeed tldr post:

Indeed this is an adventureous idea to pursue, most would say insane, but people said that when BTC was under a dollar too, so what. Its all hypothetical based on chart analysis. If we connect the two major spikes in ratio in 2013 and 2015 and draw a trendline down, we get the following picture:

This implies that if we break up from here, and manage to close above the trendline with strong bull presence (currently trendline resides at roughly 0.012) it could potentially reverse the longterm downtrend and drive prices way above 0.05.

As a final conclusion, Litecoin is more than two years behind Bitcoin, there is no fundamental reason why Litecoin is that low in comparison. Essentially its even the opposite, LTC is based on the same code, however has 4x the speed, no issues, no political drama, solid developers focused on longterm strategy, implementation of Segwit in process. Hence, to me its obvious that LTC is severely undervalued at the current price and will very likely surge in 2017 and years beyond.

//Disclaimer: Viewpoints mentioned above are solely personal opinions and no trading advice. I am in no way saying this is the ultimate truth. Please feel free to discuss. This is Trading, and this is Crypto, everything can happen. So trade carefully.


Nice post, thanks :-)

Well, as someone mentioned in an other post, Litecoin doesn't have a project beside "being the silver to the gold [bitcoin]". Thus, lacking of "a new hyped FinTech feature" must have played a role in why hasn't drawn so much capital. However, Bitcoin too doesn't have any project beside being a digital gold. If we follow this reasoning, Litecoin has a promising future.

I absolutely agree with your analysis.

"LTC is severely undervalued at the current price" I second that.. matter of fact I second the entire post..

The price of STEEM is 0.163636 USD per STEEM

Nice forecast :)

This is a very good post and you make strong points that are still valid. What I still don't understand is the price of LTC compared with BTC. Why is it still so low with segwit activated. BTC hitting new highs after new highs, Ethereum and other coins hitting new highs but LTC is kind of stuck. I would expect it to atleast be in the 30's.

Very nice post.

I've been buying Litecoin... am I crazy? It's not moving like BTC and ETH and it lacks the hype of those either. Can someone give me a good source for news about it? Sorry I'm such a noob.

It's moved since you posted this, that's for sure.

Very insightful analysis. Followed!

Nice anylsis @masterofcoinz . upvoted , resteemed , followed

I think we might be seeing it now. Ltc shows support over $50. Major correction.

The hash rate of Litecoin increased by 52% in the last two weeks from 1.9T to 3.0T.

If hash rate = value of network, something is definitely up.

Good points in this article. Good to see I'm not the only one that is thinking about this. The fluctuating market will result in the greatest price swings any market has ever seen. Does anyone know about: This site did all the research for you. It's truly amazing. For example: For a complete Litecoin Research report.