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Lighter’s native token LIT has dropped 20% in the past 24 hours, breaking below a key technical support level of $2.30 and confirming a bearish reversal pattern.
The decline extends a week-long selloff that has pushed the token down more than 30% despite a protocol-led buyback initiative launched earlier this month.
Technical indicators show Lighter’s price structure firmly tilted toward sellers. After failing to sustain gains above roughly $3.10 to $3.20 following a brief rebound fuelled by a protocol-led buyback initiative, the token formed a series of lower highs and lower lows, a classic sign of bearish momentum.
“The break below $2.30 isn’t just noise; it’s a clear technical breakdown that often precedes deeper sell-offs, and with RSI in oversold territory and sellers still in control, we’re likely to see continued pressure unless major support levels hold” – Alex Tsiropoulos at Digital Asset Insights.
The drop was accompanied by a significant 64% contraction in spot trading volume, signalling reduced buying interest as the price sank.
Conversely, derivatives markets saw an uptick in activity, with perpetual trading volume jumping nearly 118% and open interest climbing 47%, suggesting an increase in leveraged positions focused on short-term directional bets rather than long-term holds.
Lighter’s development team launched a treasury buyback programme in early January, directing 50% of protocol fees toward repurchasing LIT tokens in an effort to buoy the price and tighten the circulating supply.
Initially, the move sparked a modest rebound as whales and short-term holders pushed prices toward $2.89. However, momentum quickly waned as traders took profits and rotated capital into other assets.
“We believe buybacks can be a positive long-term mechanism, but in a broader market where sentiment is bearish, their impact is inherently limited.” Dr Elaine Markovic said at Atlantic University
Lighter founder and CEO Jordan Pierce recently addressed community concerns, emphasizing the project’s long-term technical growth and ecosystem expansion, including tokenized stock offerings and enhanced wallet features, but declined to comment directly on price forecasts.
The LIT sell-off arrives against a backdrop of broader market weakness, where several major digital assets have shown bearish technical setups.
Bitcoin and Ethereum have struggled to break key resistance levels, contributing to overall risk-off sentiment among investors and elevating volatility across alternative tokens.
Analysts point to a combination of profit-taking following recent rallies, shifting liquidity back into safer assets, and waning institutional interest as drivers behind the downturn.
Mina Patel at Chain Views Research says, Until we see conviction at higher time-frame support levels across major markets, altcoins like LIT will remain vulnerable to outsized moves on low volume.
So far, traders and investors are watching the $2.00 to $2.05 zone as the next critical level for LIT. A sustained break below that threshold could prompt further declines, whereas a stabilization above it might signal the start of a short-term relief bounce.
