LIT Token Gains Momentum as Whale Buys 1.28M Tokens and Buybacks Begin

Lighter’s native token, LIT, has shown strong upward movement amid significant on-chain activity. A whale deposited $4 million USDC into the Lighter decentralized exchange (DEX) and purchased 1,285,010 LIT tokens at an average price of $2.96. The whale’s wallet still contains $193,717 USDC, suggesting a potential continuation of the buying spree according to reports.

The price surge coincided with the launch of Lighter’s buyback program, initiated on January 6. Using protocol fees and the Lighter Assistance Fund, the treasury and other entities purchased around 180,700 LIT tokens at an average price of $3.05, reducing token supply and reinforcing confidence in the platform as reported.

LIT’s 24-hour trading volume increased 89% to $36 million, driven by whale participation and the buyback program. Whale activity included a $3.36 million USDC deposit used to buy over 1.119 million LIT tokens, further pressuring the price upward according to analysis.

What Drives Investor Sentiment Around LIT?

Lighter operates as a decentralized perpetual contract exchange, combining the transparency and self-custody of DeFi with the functionalities of centralized exchanges (CEX). This hybrid model attracts both institutional and retail investors seeking flexibility in trading and staking. Additionally, Lighter recently launched a buyback program using revenues from exchange products to reduce the token supply, a move that can bolster market confidence according to reports.

The treasury currently holds enough assets—$1.35 million in USDC and 180,000 LIT tokens—to support further buybacks. If sustained, this could repurchase up to 3% of the total supply. The buyback model aligns token demand with protocol usage, reinforcing the long-term value proposition for LIT holders as reported.

What Are the Key Risks for LIT Investors?

Despite the bullish momentum, LIT has shown signs of a potential bearish reversal following a 21% rally. A head and shoulders pattern is forming on the 4-hour chart, suggesting downside risk if the neckline at $2.56 fails. Technical indicators like Chaikin Money Flow and Money Flow Index indicate weakening momentum, with derivatives positioning leaning net short according to analysis.

Investors should monitor key support levels: $2.97, $2.78, and $2.56. A close above $3.26 would invalidate the bearish pattern, but any breakdown below $2.56 could trigger an 11% decline as reported.

The current market dynamics suggest a balance between bullish accumulation and potential short-term corrections. While the buyback program has improved sentiment, traders are advised to watch technical indicators and price levels for confirmation of the next directional move.