LIT Jumps 13% as Protocol Buyback Program Kicks In

• LIT surged 13-18% after Lighter activated its protocol fee buyback program on January 6.
• On-chain data shows treasury spent $10,000+ USDC buying 180,700 LIT tokens, reducing supply.
• Whale activity included a $3.36M USDC deposit used to purchase 1.119M LIT tokens.
• Trading volume jumped 89% to $36M as technical indicators signal room for further upside.

Lighter's LIT token rallied over 13% this week following the launch of its protocol buyback initiative. The program uses DEX fees to repurchase tokens directly from the market, creating transparent supply reduction visible on-chain. This structural shift aligns token demand with platform usage while whale accumulation adds buying pressure. Market participants now watch whether LIT can hold key support levels to maintain the uptrend.

How Did Lighter's Buyback Program Drive LIT's Price Surge?

Lighter activated its token buyback mechanism on January 6, channeling protocol fees into market repurchases. The treasury spent over $10,000 in USDC acquiring 180,700 LIT tokens while the Lighter Assistance Fund bought 165,790 more tokens. These on-chain verified transactions reduce circulating supply and create consistent buy-side pressure. The program commits up to 30 million LIT (3% of supply) for repurchases using $1.35 million in ready USDC treasury funds.

This approach ties token demand directly to protocol usage through a transparent flywheel effect. Higher trading volume generates more fees for buybacks, which in turn may support LIT's valuation. Market confidence strengthened as the team delivered on December's tokenomics roadmap, with the Chaikin Money Flow indicator confirming accumulation patterns.

What Role Are Whales Playing in LIT's Rally?

Whale transactions amplified the buyback impact, with one entity depositing $3.36 million USDC into Lighter to purchase 1.119 million LIT tokens. Justin Sun acquired 13.25 million LIT for $33 million, raising his holdings to 5.32% of circulating supply. Another whale spent $8.67 million on 3.44 million tokens at a premium, signaling strategic positioning.

These large-scale accumulations suggest institutional confidence in Lighter's DeFi utility. The whale activity coincided with an 89% volume spike to $36 million, reflecting broader market participation. That said, past coordinated sales caused volatility, highlighting concentration risks that remain a concern for investors.

Can LIT Sustain Its Bullish Momentum?

Technical indicators suggest room for continued gains if key levels hold. LIT trades at $3.09 with the RSI at 66, avoiding overbought territory while the Money Flow Index stays above 80. Bulls must defend the $2.95 support zone to maintain the upward structure, with a break above $3.19 opening path to $3.60. The buyback program's long-term effectiveness depends on sustained protocol revenue generation.

Downside risks emerge if sentiment shifts or selling pressure returns. A close below $2.97 could invalidate the current bullish setup given historical volatility. Market participants monitor treasury buyback frequency and TVL growth to assess whether the rally reflects organic adoption or speculative momentum.