The entire cryptocurrency market took a dive around 9:00 am (UTC), with Bitcoin leading the downward move. However, LTC prices managed to rebound faster and more sharply than most, adding critical support to the beleaguered currency and our Litecoin price forecast.
At the time of writing, the Litecoin to USD exchange rate is up 0.40% to $52.24. Meanwhile, the Litecoin to Bitcoin exchange rate increased 2.19% to 0.01234840 BTC.
Trading volumes have been steadily decreasing over the last week, giving rise to the worry that China’s ban on cryptocurrency trading will sap the market of liquidity. After all, that Litecoin news may have broken in September, but it can have a delayed effect all the way through October.
This is because two of China’s largest exchanges, Huobi and OKCoin, are scheduled to officially end Litecoin to yuan trading at the end of October.
Considering that both those exchanges played a major role in Litecoin’s rise this year, it’s not crazy to worry about the dropoff in trading activity.
To be sure, their positions as top Litecoin trading hubs were usurped by Bithumb, GDAX, and Bitfinex, but that doesn’t mean they are completely out of the picture. Huobi and OKCoin still account for 2.81% and 6.74%, respectively.
If Chinese traders unwind those positions into yuan rather than another cryptocurrency, it’s unlikely that we’ll ever see that money again. The first thing China did was ban yuan-denominated deposits at these exchanges in order to prevent capital flight.
So any investor (in China) that takes money out of the cryptocurrency market cannot possibly reenter. This definitely poses some downside risk to our Litecoin price forecast.
It would be foolhardy to pretend like Litecoin is on a guaranteed incline. The truth is more complicated. There is tremendous potential in Litecoin prices, meaning that it could triple in the next few months. That upside story is long and fruitful, but it behooves us to consider the less likely option of stagnating prices and further losses.
Consider your own risk profile, because it is still possible that LTC will reach its Litecoin price forecast of $200.00. However, it will need a massive fuse to start that kind of bullish rally.