LIT Faces Pressure from Whale Loss and Low Revenue Amid Buyback Efforts

• A whale's 1x long position in LIT resulted in a $1.8 million floating loss on 12 January, while Lighter's daily revenue dropped to $8,450.
• Lighter initiated a treasury buyback program, using 50% of protocol fees from its decentralized exchange to repurchase LIT tokens, aiming to reduce supply by up to 3%.
• As of early January 2026, the Lighter treasury had repurchased 180,000 LIT tokens at a cost of around $550,000.

Lighter's token price has experienced significant downward pressure, with a whale incurring a $1.8 million loss on a 1x long position in LIT on 12 January. At the same time, Lighter's daily revenue fell to just $8,450, raising concerns about the token's utility and investor confidence. These developments indicate a challenging market environment for LIT, with investors becoming increasingly cautious about holding the token.

Despite the recent challenges, Lighter has taken steps to stabilize its token price through a treasury buyback program. The program allocates 50% of protocol fees from its decentralized exchange to repurchase LIT tokens. This initiative is designed to reduce the token's supply by up to 3% and align its value with the protocol's growth. Whale activity, including a $4.86 million WBTC conversion and a $4 million USDC deposit, has reinforced investor sentiment and demonstrated institutional interest in the token.

Technical analysis and market sentiment suggest continued bearish pressure on LIT. Price dropped 20% after breaking below a key support level, extending its post-launch sell-off and keeping short-term pressure firmly in place. Derivatives data show a rise in perpetual trading volume and open interest, suggesting active short-term positioning. A liquidity cluster above $2.7 could offer support if the price breaks through with momentum. Momentum indicators are weak, with RSI hovering in oversold territory.

What Factors Are Pressuring LIT's Price?

Lighter's token price has been under pressure due to several factors. A whale's 1x long position in LIT slid into a $1.8 million floating loss on 12 January. At the same time, Lighter's daily revenue fell to $8,450. These developments indicate a challenging market environment for LIT, with investors becoming increasingly cautious about holding the token. The drop in revenue has raised doubts about the token's utility and investor confidence.

The recent decline in LIT's price has been exacerbated by a breakdown below a key support level. This technical failure has extended the token's post-launch sell-off and kept short-term pressure firmly in place. Market participation is skewed toward short-term traders rather than long-term holders. Momentum indicators are weak, with RSI hovering in oversold territory. The token has fallen 31% over the past week and is now roughly 73% below its $7.86 all-time high set shortly after launch on Dec. 30.

What Is Lighter Doing to Stabilize LIT's Price?

Lighter has taken steps to stabilize its token price through a treasury buyback program. The program allocates 50% of protocol fees from its decentralized exchange to repurchase LIT tokens. This initiative is designed to reduce the token's supply by up to 3% and align its value with the protocol's growth. As of early January 2026, the Lighter treasury had repurchased 180,000 LIT tokens at a cost of around $550,000. Whale activity, including a $4.86 million WBTC conversion and a $4 million USDC deposit, has reinforced investor sentiment and demonstrated institutional interest in the token.

The buyback program is transparent, with on-chain data tracking treasury wallet activity. Institutional investors holding 13.2 million tokens valued at $40 million have shown strong belief in the token's long-term potential. Lighter confirmed that the treasury account would track protocol revenue and buyback activity, reinforcing transparency. The program aims to stabilize token value through supply reduction and continued growth.

What Are the Market Implications for LIT?

Market participation in LIT futures showed signs of recovery, with rising open interest and volume. A liquidity cluster above $2.7 could offer support if the price breaks through with momentum. However, the token's price has struggled to maintain previous highs. Rising open interest and volume suggest potential market participation and a possible recovery if the price moves through key levels. Market makers often target liquidity clusters, which could help push LIT north with enough volume.

Despite the buyback program, LIT has not seen a significant rebound in price. A brief rebound after the announcement was mostly fueled by whale wallet activity. The momentum quickly faded as early holders sold and sector-wide rotation started to affect the price. Lighter has expanded its product line to include tokenized stock offerings like MSTR and CRCL, as well as multi-signature wallet support. These updates strengthen the platform's longer-term foundation, but so far they haven't translated into a change in near-term sentiment.