Litecoin price drifted lower after the hawkish statement by Jerome Powell, the Federal Reserve Chairman. It plunged to a low of $84, which was the lowest level since January 20 of this year. LTC has plummeted by more than 18% below the highest level this year.
Hawkish Federal Reserve
The main catalyst for the LTC/USD pair is the latest testimony by Jerome Powell, the Fed Chair. Speaking in Washington, the Fed Chair said that he supported a higher peak of interest rates since inflation remains at an elevated level. He said:
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Therefore, investors now anticipate that the Federal Reserve will hike interest rates by 0.50% in the upcoming meeting. Before that, expectations were that the Fed would hike by 0.25%. As a result, cryptocurrencies like Litecoin, Bitcoin, and Ethereum all plunged after the statement.
Read more: How to invest in Litecoin.
Similarly, other financial assets reacted similarly, with the tech-heavy Nasdaq 100 index plunged by more than 200 points. Bond yields continued jumping, with the 10-year jumping above 4% for the first time since next week.
Therefore, the hawkish tone means that we are likely to see Litecoin and other cryptocurrencies remain lower for a longer period. The same is true for other assets like stocks. On the other hand, the US dollar index (DXY) is expected to remain higher for longer.
The only hope for LTC is the upcoming US non-farm payrolls (NFP) and inflation data scheduled for Friday and Tuesday, respectively. If these numbers show some progress, we could see the urgency for rate hikes ease.
Litecoin price prediction
The 4h chart shows that the Litecoin crypto price moved below the important support levels at $89.95 and $88.30. These were the lowest levels on February 9 and February 13, respectively. They were also the neckline of the head and shoulders pattern that has been forming recently.
Litecoin has also moved below all moving averages and the 38.2% Fibonacci Retracement level. Therefore, the outlook of the coin is bearish, with the next key level to watch being at $80. The stop-loss of this trade will be at $90.
