LIT surges 13% thanks to retail buying, but why are whales still quietly selling off?

Decentralized Exchange Lighter (LIT) is emerging as a formidable competitor, directly challenging veteran DEXs like Hyperliquid in terms of perpetual futures trading volume. The platform’s growth momentum aligns with the overall market recovery, with LIT recording an increase of over 13% within 24 hours at the time of observation.

Despite lingering polarization within the investor community, the LIT token still broke out during the weekend recovery. However, when viewed over a longer timeframe, LIT’s price movement mostly fluctuates within a narrow range, contrasting with the clear surge in trading activity on the platform.

Perp Volume Drives Daily Price Increase

The trading volume of perpetual contracts is reshaping the crypto market landscape, as a wave of high-leverage and privacy-focused DEX trading continues to explode. In this trend, LIT quickly rises as a bright spot, ranking among the top 4 leading platforms in the market.

Data from DefiLlama shows that in just one week, LIT’s perp volume increased by more than 34%. Currently, only Hyperliquid (HYPE) and Aster (ASTER) hold a larger market share, further solidifying LIT’s increasingly prominent position in this race.

Notably, the Lighter network also set a new record for daily perp volume in a year, reaching $7.53 billion. This momentum has contributed to supporting LIT’s price recovery, even as the upward trend spreads across many other altcoins.

Source: DeFiLlamaHowever, the paradox lies in the fact that despite the double-digit surge in trading volume and the lively activity of exchange tokens, LIT’s price remains nearly flat. What is holding back the rally, preventing LIT from turning liquidity heat into a real breakout?

Why Hasn’t LIT’s Price Breakout Yet?

Over the past month, the LIT/USDT pair has traded within a narrow range from $1.40 to $2.04. This prolonged fluctuation indicates a relatively clear accumulation phase, although the volatility is still sufficient to maintain investor interest.

On the 4-hour timeframe, LIT has broken above the SuperTrend line, indicating that buying pressure from the bulls is gradually returning. However, the Accumulation/Distribution indicator reveals that approximately 94.88 million LIT are in the process of distribution, suggesting selling pressure has not yet diminished.

Source: TradingViewThis also explains why selling pressure continues to exist. Most tokens are still being shorted, even though the price remains around the middle of the recent sideways accumulation range.

Only when LIT decisively breaks through key resistance levels at $1.805 and $2.041 can the upward trend be reinforced. Conversely, if it fails to break out, a prolonged accumulation scenario is likely to continue amid a market still leaning toward a negative outlook.

Interestingly, polarization between whales and retail investors also increases risk, making the current rally potentially short-term rather than indicative of a sustainable trend.

The Standoff Between Whales and Retail Investors

Most retail investors are currently leaning toward long positions, capitalizing on the short-term recovery of the price. Data from Etherscan shows that the total value of Long LIT orders from this group on Uniswap (UNI) has reached around $800. However, the market is not entirely consensus, as some sell orders still appear, reflecting mixed opinions from whales.

Source: TradingViewOn the other hand, whales continue to maintain a dominant stance with a short-selling strategy. According to Onchain Lens, one whale has opened multiple short positions, including LIT. Notably, despite LIT’s price increase during the day, this whale is still realizing a profit of up to $1.59 million thanks to 3x leverage.

This development indicates that the market balance still favors whales, even as retail investors try to exploit short-term recoveries. To trigger a clear breakout or a sustainable trend reversal, whales will likely need to change their trading stance.