Litecoin (LTC/USD) suddenly entered freefall during the past 8 hours, dropping by over 12% to as low as $2.97 on BTC-e.
Excluding a bizarre flash crash to $2.21 on July- a freak incident at a time when the going rate for LTC was near $8- it is LTC’s first time breaking through $3 in 2014 and its lowest level in over 13 months.
Today’s steep drop came without warning. LTC had been hovering, in a seemingly nonthreatening manner, in the $3.35-$3.40 range. However, a closer look illustrates a number of factors that likely contributed:
– LTC had been uncharacteristically flat during the past two months, which at the time suggested that a bottoming process may be in the works. That all ended last week when LTC did finally break into new 2014 lows.
– 8 hours before the crash, LTC touched another low of $3.32.
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– Bitcoin (BTC) has also broken into multi-week lows. While LTC has shown a recent habit of decoupling from BTC’s movements, it still remains faithful during extreme times, often amplifying its progenitor’s moves.
There has thus been a significant build-up of unspent selling pressure, unreleased until catalyzed by a prick in the latest bubble and sufficient momentum to motivate sell orders from traders looking to get out of the market.
At the height of the drop, only minutes ago, volume peaked at over 30,000 LTC ($90,000) per hour- a level not seen in over a month.
LTC’s extreme behavior relative to BTC’s translates into an LTC/BTC rate that has crashed back through the psychologically significant 0.01 level to 0.0092, challenging one-month lows.
Many other alts are significantly lower today as well, with Namecoin and Ripple as notable exceptions.