Will Litecoin’s Daily Death Cross Mark Its End?

The price of Litecoin has recently fallen along with the rest of the cryptocurrency market, despite not being deemed a security by the US Securities and Exchange Commission (SEC).

This downward pressure puts the altcoin at risk of forming a “death cross” on the daily timeframe. Although this signal sounds ominous and often indicates a downtrend is coming, it might not be the end for Litecoin after all. Let’s take a closer look.

Lackluster Litecoin Performance Ahead of Halving Attributed to SEC

With Litecoin’s halving just weeks away, the currently eleventh-ranked cryptocurrency by market cap was expected to perform better than it has.

Fundamental and technical signals both point to LTC being undervalued, yet the coin has suffered alongside other altcoins from SEC-related sell pressure.

The US SEC is attempting to harm the cryptocurrency industry, which is causing LTCUSD daily charts to approach an ominous death cross.

Is this a valid breakout of the downtrend line? | LTCUSD on TradingView.com

Doing A Double-Take On The Daily LTCUSD Death Cross

A death cross occurs when the 50-day moving average crosses below the 200-day moving average from above. This is considered a sell signal in a moving average-based trading system, and often precedes a negative trend change. But not always.

A closer look at the 2020 death cross into golden cross | LTCUSD on TradingView.com

The chart above shows an example of a previous death cross from late 2020, which immediately rolled into a golden cross as soon as Litecoin found some support and started rising again.

LTCUSD went on a massive rally lasting several weeks of upside. For this situation to repeat, Litecoin absolutely has to recover from current levels and resume its formerly bullish momentum. Otherwise, a death cross could lead to renewed selling from investors who expected more out of the halving.

Death cross and golden crosses can sometimes trigger back and forth in a choppy market, which is a drawback of using moving averages as trading signals. This is due to volatile price action pulling the faster moving average back and forth through the slower moving average. Furthermore, as an average of price action, moving averages are lagging indicators in general.

A golden cross must be left on the chart when all the consolidation ends, otherwise the looming death cross signal could have truly deadly implications. With Litecoin’s halving scheduled for under 45 days from now, anything is possible.