Litecoin is gearing up to reclaim a new year’s high as derivatives funding surges. A minor pullback appears likely as technical indicators warn investors, adding to the existing bearish sentiment.
Litecoin [LTC] has entered one of its most bullish phases in recent months, with the asset targeting a fresh 2025 high.
Market analysis shows that liquidity inflows and rising buying volume could boost LTC’s chances, with $437 million added to the derivatives market in the past day, according to CoinGlass.
Still, while liquidity provides upside potential, existing sell orders remain active and could trigger a liquidation cascade. AMBCrypto’s analysis provides more insight into what’s next for LTC’s price action.
Over the past day, short positions have taken heavy losses in the derivatives market, while long traders have gained dominance.
During this period, shorts lost $3.48 million — a stark contrast to the $524,790 lost by longs — suggesting a potential trend reversal and further price rally.
A sharp increase in both Funding Rate and volume further supports this momentum shift. At press time, long trading volume exceeds short volume, signaling growing bullish activity.
Over 52% of derivatives trading volume in the past 24 hours came from longs, pushing the long-to-short ratio above 1 — typically a signal of a developing rally.
The Funding Rate has also flipped positive, reaching as high as 0.0054%. This indicates that the market is currently dominated by long positions.
Notably, longs are paying a premium to maintain their positions, further confirming market sentiment.
Technical indicators suggest a potential decline remains on the table for LTC, with the Relative Strength Index (RSI) and Aroon indicators flashing caution signals.
The RSI has moved into overbought territory, crossing above 70, implying that buying momentum could be peaking and exhaustion may soon set in.
This typically leads to a pullback, although timing remains uncertain.
Interestingly, the Aroon indicator presented a slightly different picture.
The Aroon system tracks potential trend shifts using two lines: Aroon Up (orange) and Aroon Down (blue). When Aroon Up stays above Aroon Down, it signals that bullish momentum is still in control.
At press time, the Aroon Up sat at 100% while Aroon Down was at 74% — still bullish, but the narrowing gap suggested a possible trend reversal.
If a flip occurs, it would align with the RSI’s overbought signal and likely trigger a short-term correction.
LTC has reached a key supply zone as it attempts to rally toward a new all-time high, according to market analysis.
The asset has now entered a critical resistance area that rejected price action on two occasions this year — the latest sending LTC to a low of $63.07.
With momentum and trading volume rising 230% to reach $1.97 billion, the rally remains strong. If sustained, LTC could reclaim its 2025 high of $141.15 and possibly extend to its December 2024 peak of $147.
