The Litecoin price held steady on Thursday as investors reflected on the relatively hawkish Bank of England (BOE) and Federal Reserve monetary policy decision. The LTC token is trading at $160, which is a few points below this week’s high of $162.
Hawkish central banks
The biggest story in the market on Thursday was on the interest rates decision by the Federal Reserve and the Bank of England (BOE).
On Wednesday, the Fed concluded its monetary policy meeting and decided to leave interest rates unchanged. It will also continued with its asset purchase program at a pace of $120 billion per month.
However, the bank signalled that it will start winding down the asset purchases in 2022. Some analysts believe that the economic rebound will see the bank tapering these asset purchases in December or in January.
At the same time, the dot plot showed that the bank will start rising interest rates in 2022 and do 7 hikes by 2024.
Meanwhile, the Bank of England (BOE) decided to leave its interest rate unchanged at 0.10%. Like the Fed, the bank said that it will likely start tapering soon. Besides, it expects that the rate of inflation will jump to 4.2% in the near term.
The Fed and BOE interest rate decisions are important for all cryptocurrency prices, including Litecoin. Besides, many analysts attribute the recent jump in cryptocurrency prices to the overall policies by central banks.
After the Covid-19 pandemic, the Fed decided to lower interest rates to zero and print at least $120 billion per month. These actions devalued the US dollar and then pushed investors to risky assets like cryptocurrencies.
Therefore, there are concerns that the opposite will happen when central banks start tightening policies. Still, there is a likelihood that crypto prices will hold steady because investors have already positioned themselves for tapering.
Litecoin price prediction
The four-hour chart shows that the LTC price has been under pressure lately. The chart shows that the coin has formed a head and shoulders pattern. It is currently below the neckline of the pattern and moved below the 25-day and 50-day moving averages. The coin has also formed a break and retest pattern, which is usually a bearish signal.
Therefore, there is a likelihood that the Litecoin price will maintain the bearish momentum in the near term, with the key level to watch will be the support at $140.