Lighter [LIT] has been experiencing near-collapse pressure, with the altcoin trading within a strong downtrend. Since LIT was rejected at $1.3 a week ago, it has closed at lower lows, reflecting intense bearish pressure.
As a result, LIT dropped to a new all-time low of $0.91 after breaching the $1 support level. In fact, at press time the altcoin traded at $0.92, down 10.19%, adding to its 17% weeky decline.
With the altcoin on a strong decline, short position holders have seen their profit margin skyrocket. Onchain Lens reported that a whale holding a 2x short position now sits on a floating profit of $2.07 million.
The rising profit margin for short sellers reflected the prevailing intense downward momentum.
Lighter faces intense selling pressure
Lighter continued to decline as sellers panicked and increased spending after LIT failed to hold the $1 support level, causing further downside.
In fact, buyers have almost disappeared from the market, with their dominance dropping to zero. At the same time, seller dominance surged to 2.8 million, indicating sell-side activity.
Sellers have dominated the market over the past seven days, with their dominance peaking at 4 million while demand continued to decline.
Coupled with that, Seller’s Strength jumped to 91, while Buyer’s Strength declined to -8, further validating this seller dominance.
On the derivatives side, market participants have reduced their exposure and withdrawn significant capital from the markets.
Coinglass data showed that Lighter’s Open Interest fell from $193 million to $140 million, a $54 million decline.
The falling OI indicated aggressive market exits as traders reduced exposure, most likely in anticipation of more losses. As a result, more than $171 million flowed out of the futures market.
Traditionally, weakened demand and strengthened sell-side activity have tended to accelerate downward momentum, leading to lower prices. Thus, the prevailing market conditions left LIT exposed to potential further downside risk.
Is there further downside risk?
Lighter breached $1 support, as sellers became increasingly aggressive. With sell pressure intensifying, the momentum to the downside further strengthened.
As a result, the Relative Strength Index (RSI) dropped to 32, hitting nearly oversold territory. RSI dropped consecutively from 55 to 32, reflecting seller intensity.
The momentum further strengthened as the altcoin continued to hold below the MA and EMA, both of which sat above $1. These two momentum indicators signaled the likelihood of trend continuation, holding the prevailing market conditions constant.
Therefore, if the trend persists, LIT will most likely breach the $0.9 support and decline towards $0.85. To see a trend reversal, LIT needs not only to hold $0.9 but reclaim $1.
In doing so, the upside momentum will be strong enough to enable significant gains.
Final Summary
- Lighter [LIT] dropped below key $1 support, hitting a new all-time low near $0.91 amid sustained lower lows.
- Price remains under heavy bearish control, with a 17% weekly decline and continued downside pressure.
