Litecoin [LTC]: What this metric tells us about miners’ motivation to sell

Litecoin (LTC) bullish activity has increased since the beginning of the month. It managed to recover above $60 after ending August on a bearish note. Instead, however, new observations seem to indicate that it may suffer another slide below the $60 level.

Litecoin is one of the few cryptocurrencies that works with a proof-of-work consensus mechanism. Miner flows have so far proven to be a major sentiment factor influencing price action. Any incentive for miners to sell would therefore act as a useful indicator of possible incoming bearish pressure.

The Puell multiple is one of the indicators that may help identify instances where miners are motivated to sell. This is because the metric indicates the miner’s level of profitability at any given point.

Litecoin’s Puell multiple just completed last week with a rise to its highest price in the last 30 days.

Source: Glassnode

The high Puell multiple for LTC indicated that the profitability of miners is currently high and this may encourage them to sell.

Litecoin’s lull was also near its lowest monthly range, with it seeing some activity over the past 3 days. Interestingly, this coincided with a re-examination of the resistance level after last week’s rally.

Source: TradingView

Litecoin’s 4-hour chart highlighted another reason for a possible upcoming reversal. It became briefly overbought after a solid run over the past 4 days. Moreover, the MFI index suggests that it has already seen some selling pressure.

LTC’s on-chain readings further validated expectations of increasing selling pressure.

The MVRV index has started the new week in a reversal, confirming that profit taking is happening. It also appeared to reveal reduced profitability for buyers entering the market near the recent top.

Source: Santiment

The sharp decline in the measure of the actual ceiling confirms that there is significant buying pressure near the recent top.

conclusion

The aforementioned Litecoin-centric observations highlighted the potential for a significant short-term recovery towards the start of the week. Traders should also consider the opposite possible outcomes, such as the possibility that the new week will bring a bullish sentiment shift. This would delay any potential downside, giving way to the bulls.

Litecoin’s latest rally has so far shown friction near the short-term support of $64. This can be seen as evidence that LTC may not be ready for a breakout on the charts.

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