The Litecoin price is trading at a key support level as investors remain concerned about the state of the monetary policy in the United States and around the world. The LTC coin is trading at $130, which is about 56% below the highest level in December. It is also about 70% below its highest level in 2021.
Hawkish Fed concerns
Litecoin and other cryptocurrencies have declined sharply in the past few months as investors worry about the Federal Reserve. With the economy recovering investors are worried that the Fed will move quicker than expected.
The Fed has already started tightening its policies. In November, the bank decided to reduce the size of its asset purchase program by about $15 billion. It then decided to double this tapering to $30 billion in December.
Last week, the Fed published the minutes of this meeting. These minutes showed that the bank was more hawkish than expected. Most members concluded that the bank will be more hawkish this year. That will include implementing about 3 rate hikes even as the number of Omicron cases rose.
Data published on Friday provided more incentives for the bank to hike rates. For example, the numbers revealed that the American economy added 199k jobs in December while wages rose by 4.7%. The unemployment declined to a pandemic-era low of 3.9%. If the trend continues, the unemployment rate will fall to about 3.0% later this year.
The Litecoin price will next react to the latest American consumer inflation data scheduled for Tuesday. These numbers are expected to show that the American inflation jumped to 7% in December. This figure will be about 5% above the Fed’s target of 2%.
Therefore, the Litecoin price will likely remain under pressure considering that it did well in a period of low-interest rates.
Litecoin price prediction
The daily chart shows that the LTC price has been in a bearish trend in the past few months. Along the way, the coin has moved below the 50-day and 25-day moving averages. It has also moved below the neckline of the head and shoulders pattern. The coin has also declined below the lower side of the bearish flag pattern.
Therefore, the path of the least resistance for the Litecoin price is to the downside. This will see it drop to the key support level at $80.
If you want to trade cryptocurrencies, you might be interested in automated cryptocurrency trading robots such as Bitcoin Prime, Bitcoin Era and Bitcoin Code.
