Litecoin price crashed more than 8% on Wednesday as investors fret over the impasse around the US debt ceiling talks. Litecoin, the silver to Bitcoin’s gold, was trading 6.75% lower at $85.50 at press time. The asset’s market cap has plunged to $6.2 billion over the last day, while its total volume inched lower. The altcoin currently ranks 12th after TRON and ahead of Polkadot.
Why is LTC Crashing?
Litecoin price was in freefall mode on Wednesday as global markets fell against the backdrop of uncertainty around the US debt ceiling negotiations in Washington. The global crypto market was in the red, with the global crypto market cap falling more than 3% over the last day to $1.10 trillion. The total crypto market volume increased by more than 12% over the same period, while Bitcoin’s dominance slipped.
Crypto heavyweights, Bitcoin and Ethereum, fell by more than 3% each during Wall Street’s trading session. At the time of writing, the Bitcoin price was trading below its crucial support level of $26,500 at $26,263.25, while the Ethereum price was trading at 1,789.60. Most altcoins, including Shiba Inu, Dogecoin, Solana, and Avalanche, followed closely behind, moving in tandem with the heavyweight’s performance.
Global markets have been in the red for the past few days amid uncertainty around the US debt ceiling negotiations and a fast-approaching deadline. Traders have grown nervous at the prospect of an unprecedented US government default early in June which will lead to a possible recession of the US economy.
US short-term Treasury yields have jumped higher and are hovering slightly around their highest level in two decades. The US dollar has held its bullish momentum against a basket of peers as the focus remains on the Washington negotiations.
Investors are chewing on the meeting minutes by the Federal Open Market Committee (FOMC) released earlier in the day. In the minutes, Fed policymakers were divided over where to go with interest rates, with some supporting higher interest rates, while others opposed the move. Markets are uncertain over the Fed’s interest rate path as the Fed appears to be moving toward a data-dependent approach in which several factors will determine its next move.
Litecoin Price Analysis
Litecoin price has been under intense pressure for the past few days as macroeconomic factors continue to weigh on the global crypto market. As highlighted on the daily chart, the asset has managed to move below the 50-day and 100-day exponential moving averages, as well as the 50-day and 100-day simple moving averages. Its Relative Strength Index (RSI) has moved below the neutral zone.
Therefore, the Litecoin price is likely to fall further in the ensuing sessions as the crypto market struggles to recover. If this happens, bears will be eyeing the next support level at $82. However, a move past the key resistance level of $87.85 will invalidate the bearish view.