Lighter drops 20% after $1.80 rejection: is LIT's correction over?

Lighter [LIT] took a sharp hit after getting rejected at the $1.80 resistance, with the token dropping more than 20% within 24 hours as sellers swarmed the market. The slide pushed LIT down to roughly $1.38, wiping out a big chunk of the rally that had carried the asset to multi-month highs just days earlier. Trading activity also cooled during the sell-off, with volume slipping 17.58% to $128.6 million. The combination of falling price and thinning volume suggested traders had stepped back after the rejection. Still, LIT held above a key breakout region, leaving the question of whether buyers could steady the market before the next round of selling arrived.

Despite the steep correction, Binance's top traders stayed notably bullish — because apparently 20% dips are just "healthy pullbacks" in this market. CoinGlass data showed 68.75% of top trader accounts remained long, with only 31.25% on the short side. The Long/Short Ratio sat at 2.20, pointing to a clear imbalance in favor of bullish bets. That kind of positioning suggested experienced traders were treating the dip as a correction rather than the start of a longer downtrend. However, packing so many longs into one side also raises the stakes: if LIT fails to hold key support, liquidations could pile on the downside. Either way, the persistence of bullish positioning showed that a large slice of traders still expected a recovery despite the aggressive sell-off.

After bouncing off the $1.80 rejection, LIT retraced toward the $1.38 region, which lines up with a key breakout area from the recent rally. This zone now serves as the first major support level buyers need to defend. A sustained hold above $1.38 would keep the broader recovery structure intact and might entice fresh buying. Break down below it, though, and the market could face a deeper retracement toward the $1.12 support level flagged on the chart.

Looking at the indicators, the MACD remained in bullish territory despite the pullback. The MACD line stayed above the signal line, and both indicators held above zero. The histogram had started shrinking, but bullish conditions had not fully disappeared. So buyers still had a window to regain control if support held.

Liquidation data showed a dense cluster of liquidity between $1.55 and $1.60. Several large liquidation pools had formed in that range, making it one of the more tempting short-term targets if buyers pick up strength. Markets tend to drift toward zones packed with leverage, since those areas offer liquidity for the bigger players. A sustained recovery from current levels could easily pull LIT into that region.

On the downside, liquidity looked thinner below current prices, making lower levels less attractive for now. That said, failing to defend the $1.38 support area could still unleash another wave of selling before buyers try to step back in.

Current conditions point to a recovery still being in play despite the sharp decline. Binance traders kept favoring longs, the MACD stayed bullish, and LIT was still trading above a critical breakout zone. If buyers defend the $1.38 area, price could rebound toward the $1.55–$1.60 liquidity cluster. Lose that support, though, and the bullish case weakens — attention would likely shift to lower support levels instead.