Litecoin Drops 20% Despite 76% ETF Approval Odds

Litecoin (LTC) has experienced a pullback in the past month, erasing its gains after reaching a bottom in April. As of Sunday, LTC was trading at $85.98, marking a nearly 20% decline from its peak in May. This downward trend mirrors the performance of other altcoins such as Cardano (ADA) and Chainlink (LINK).

Despite the pullback, data indicates that the odds of the Securities and Exchange Commission (SEC) approving a Litecoin ETF have surged to 76%. The high probability of approval is attributed to Litecoin being a proof-of-work cryptocurrency, similar to Bitcoin (BTC). Unlike Bitcoin, which has a supply limit of 21 million coins, Litecoin has a supply limit of 84 million coins. Given that the SEC has already approved Bitcoin ETFs, there is a strong likelihood that it will extend the same approval to Litecoin. Such an approval would likely attract more inflows from American investors, benefiting the coin.

Another factor contributing to the potential rise in LTC price is the continued accumulation by whales. According to Santiment data, accounts holding between 100,000 and 1 million tokens have increased their holdings from 25.8 million on April 15 to 27.8 million. This accumulation suggests that large investors are bullish on Litecoin's prospects.

Additionally, Litecoin's social dominance has shown an upward trend in recent days, indicating increased attention from social media users. The social dominance index rose from 0.512% to 0.734%, reflecting growing interest and discussion around the cryptocurrency.

Technical analysis of Litecoin's daily chart reveals that the price dropped to $63.30 in April before bouncing back to $106.72 during the crypto market rally. However, it has since pulled back and moved below the 50-day and 200-day Exponential Moving Averages, signaling that bears have taken control. Despite this, Litecoin has formed a bullish flag chart pattern, which is a popular continuation sign. This pattern consists of a vertical line starting at $63.29 and ending at $106.72, with the flag section currently forming a descending channel.

Based on this pattern, Litecoin's price is likely to rebound, initially targeting the resistance at $106.7, which represents a 25% increase from the current level. If the price climbs above this resistance, it could potentially reach $140, the highest swing observed in January and February of this year. This technical analysis suggests that despite the recent pullback, Litecoin has the potential for significant gains in the near future.