Why the Litecoin (LTC) price has fallen 13% this week

After a reasonably positive start to the week the Litecoin (LTC) price has suddenly taken a real turn.

At the time of writing Litecoin is down 5.5% over the last 24 hours to US$186.85 per coin according to Coin Market Cap.

This latest decline means the popular altcoin has fallen around 13.5% since peaking at US$215.73 during trade on Monday and reduces its market capitalisation to just under US$10.4 billion.

Despite the drop it still remains the world’s fifth-largest cryptocurrency ahead of NEO (NEO) with its market capitalisation of US$6.5 billion and behind Bitcoin Cash (BCH) which has a market capitalisation of US$18.6 billion.

Why has it fallen sharply this week?

Cryptocurrency markets have been hit hard over the last few days for a number of reasons.

One is over concerns that lower trading volumes and Google searches for “bitcoin” are a sign that interest is dying down and the boom is over.

Then overnight rumours that the Binance cryptocurrency exchange had been hacked weighed heavily on sentiment. After which, news that the U.S. Securities and Exchange Commission will soon require digital asset exchanges to register with the agency added to the negative sentiment.

Traders appear to be interpreting the latter development as a sign that regulations could tighten and restrict future trading.

Finally, one issue specific to Litecoin is the launch of the LitePay payment technology. The technology was launched in February but is not yet fully functional.

This was seen as a way to bring Litecoin into the mainstream, so its delay appears to have Litecoin fans a little concerned.

Should you buy the Litecoin dip?

If sentiment shifts positively again by the end of the week then I have little doubt Litecoin could be heading above the US$200 mark again. But if sentiment remains negative it could drag prices even lower.

For this reason, I would suggest traders stay clear of Litecoin for the time being.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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