Lighter crashes 16% amid whales selling, but LIT remains in profit – How?

Lighter [$LIT] has been one of the best-performing altcoins this week. However, in the past 24 hours, Lighter appears to be correcting this move, dropping about 16%.

Still, the altcoin remains 30% in profit this week, suggesting the decline could be a normal correction in healthy trends.

SEC decision and whales’ selling impact $LIT

The decline in sentiment came after the Securities and Exchange Commission (SEC) decided to delay the trading of tokenized stocks. The pushback to allow clearer regulations has seen perp DEXes like Lighter suffer a big blow.

The DEXes had seen a decline in interest after enjoying a week of trading pre-IPO stocks. In fact, the Open Interest (OI) across all exchanges, both centralized and decentralized, had declined by more than 20%.

The top six exchanges by trading volume all saw $LIT lose OI. Binance had the highest OI of $36.93 million, with Bybit coming second at $17.20 million.

Additionally, whales were selling more than retailers, according to the Whale vs. Retail Delta. Over the past two days, retail had sold more than whales, but the script has flipped in the past 24 hours, hence why the fall was drastic.

As of press time, the delta reading was 0.054, up from a low of negative 0.11. However, the selling is way below the buying activity experienced mid-week.

This suggested that both whales and retailers were taking profits but at different magnitudes.

During this period, $LIT declined from a weekly high of $1.47 to $1.09. The decline is significant and reflected on the charts.

$LIT trading in a discount area—what to expect?

The price action of the altcoin has sharply dropped since breaking above a horizontal resistance at the $1.25 zone. Lighter broke below this level and is back in the more than one-month-long consolidation.

$LIT is now trading in the discount area as it fell below the 50% Fibonacci Retracement level. The MACD shows bears are in control as red bars increase in size.

Furthermore, the Net Volume shows well over 8 million $LIT tokens have been sold. That is, Net Volume readings fell from 5.35 million to negative 3.48 million.

Gauging the Fib levels, $LIT was trading around historical rebound levels. Bulls could anticipate a bounce at the 0.618 or 0.786 Fib levels, or even lower.

$LIT remains bullish after breaking above the $1.25 zone, but that would be invalidated if the price broke down below $0.80.

Final Summary

• Lighter crashes more than 16% amid a sentiment shift following the SEC’s decision to delay trading in tokenized stocks.
• $LIT loses a support level at $1.25 after breaking back into a range consolidation in the 4-hour timeframe chart.