Is Litecoin in Trouble? The US Dollar Surge Casts a Shadow on Its Future

• The US dollar index surged to its peak level in five months.

• The surge occurred as the US economy maintained its expansion.

• Cryptocurrencies such as Litecoin exhibit an inverse correlation with the USD.

On Tuesday, Litecoin’s price faced substantial pressure as the US dollar index (DXY) skyrocketed to its highest mark in over five months. LTC dipped to a low of $62 and is lingering close to its lowest point since December of the previous year.

US dollar index skyrockets

The prices of Litecoin and other cryptocurrencies have been under examination following events from last week. On Wednesday, the Securities and Exchange Commission (SEC) experienced a significant setback when Greyscale triumphed in a landmark case in the United States.

This win implies that the SEC is likely to approve the initiation of spot Bitcoin ETFs. While currencies such as BTC and LTC surged following the announcement, their increases diminished after the SEC opted to postpone a decision regarding funds from firms like Blackrock and Invesco.

Litecoin stakeholders are monitoring these developments closely due to the strong relationship between BTC and LTC. Notably, Litecoin was derived from a Bitcoin fork.

Thus, if Bitcoin achieves success with a spot ETF, there exists a substantial likelihood that Litecoin will also secure its ETF in the near future.

Another significant factor influencing Litecoin is the robust performance of the US dollar. The dollar index leaped to $104.5, marking the highest level in over five months. It has increased by more than 5.25% from its lowest level this year.

The index has ascended due to the strength of the US economy. Recent statistics indicate that nations such as China and Germany are facing challenges. Concurrently, the Federal Reserve has raised rates to their highest levels in over two decades.

As previously mentioned , the revitalized US dollar has propelled yields on fundamental investments like money market funds and CDs above 5%. Consequently, investors are transitioning from crypto assets like Litecoin to these alternatives.

Litecoin price prediction

The daily chart illustrates that the LTC price has been on a downward trajectory over the past several weeks. This sell-off intensified after the momentum from the LTC halving diminished. It has fallen below all moving averages and is currently forming a bearish pennant pattern. All these configurations typically suggest a bearish outlook.

Hence, it is likely that the Litecoin price will experience a bearish breakout as sellers aim for the next support level at $55.

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