Litecoin is spiking, hitting a new 1-week high of $5.55 minutes ago on BTC-e. 12 hours ago, it was trading at $4.40, making for a gain of 25%.
Litecoin has since come off its highs and is back to $5.21.
LTC/BTC is back to 0.0106. While Bitcoin has experienced a mini-rally of its own, threatening $500, it is nowhere near the scale of Litecoin’s.
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Total gains since bottoming at $3.33 during Monday’s flash crash are 67%. Such are the figures in a down market, where such corrections are of an equal or greater magnitude than the original move.
The question becomes what to make out of this rally. One should note, again, that such spikes are not unusual in any bearish market. That’s how the math works out. One will recall how Litecoin roared back to $9 from what was then new lows near $7, just over one month ago. From there, the rally stalled and the coin gradually slid back to $7, and upon breaking support, selling accelerated to recent lows.
The rapid pace of today’s spike suggests possible short covering, which often takes on such a profile. Many have become bearish on the coin’s prospects. One trader mentioned during the aforementioned recovery to $9 that an acquaintance experienced major losses during a short squeeze on Bitfinex.