Lighter Buybacks Reach 3% of Supply – Will LIT Hold Above $1?

Lighter [LIT]

Lighter (LIT) has faced ongoing downward pressure after its struggle to maintain a price above $1.50, recently trading around $1.10. In response to this, the Lighter team has initiated a token buyback program to counteract selling momentum. Despite these efforts, bearish sentiment remains dominant in the market, with recent trading volumes reflecting a significant drop.

Key Takeaways

Lighter (LIT) is trading at approximately $1.10, experiencing a daily decline of 2.4% and weekly losses around 23%.
The Lighter team launched a buyback program, repurchasing 3% of the circulating supply, totaling 7.48 million tokens valued at roughly $12.67 million.
Revenue for Lighter has sharply declined, with recent figures between $100k and $122k daily.
Despite buyback efforts, market sentiment is still bearish, with sell volumes exceeding buy volumes on exchanges.
There is a risk of LIT dropping below the $1 support level, depending on ongoing selling pressure.

Lighter Buybacks Account for 3% of Supply

Lighter initiated a token buyback program in early January, aiming to reduce circulating supply by repurchasing LIT tokens from the market. To date, they have successfully bought back 7.48 million LIT tokens, worth approximately $12.67 million. In the latest purchase, the team acquired 812,000 LIT for around $1.06 million. According to their disclosures, these repurchased tokens constitute about 3% of the circulating supply. Importantly, these buybacks are funded through revenue generated across Lighter’s products. However, the protocol has seen a significant decline in revenue over recent months.

Lighter revenue Source: DeFiLlama

Previously, Lighter's daily revenue reached highs near $1.5 million, but it has since dwindled to around $100k–$120k. Over the past day, revenue was approximately $122k, indicating a sharp drop from earlier peaks. Despite the reduced revenue, the team remains committed to executing automated buybacks, demonstrating their resolve to stabilize token demand.

Market Sentiment Remains Bearish

Even with the buyback initiatives in place, the overall market sentiment is largely bearish. In the Binance derivatives market, sellers have dominated activity over the past month. On March 8th, LIT experienced a sell volume of approximately 1.7 million compared to a buy volume of 1.28 million. Over the same period, net buy volume fell to –3.5 million, showing continued selling pressure.

Lighter buy sell volume Source: Coinalyze

Historically, a sustained trend of selling often leads to further downward price movements as bearish momentum builds.

Lighter perpetual volume Source: DeFiLlama

The perpetual markets have shown reduced participation as well, with volumes declining significantly in recent days. The perpetual trading volume dropped from around $3.1 billion to $1.1 billion within just three days, marking a reduction of approximately 64%. This suggests that traders may be minimizing their exposure as they await a clearer trend in the market.

Is the $1 Support Level in Jeopardy?

Lighter continues to exhibit downward momentum in the context of broader risk-off conditions in the crypto markets. This environment has prompted holders to sell during minor rebounds, leading LIT toward lower price levels. Momentum indicators also indicate a reduction in bullish strength.

LIT Stoch & SAR Source: TradingView

The Stochastic RSI has formed a bearish crossover within oversold territory and remains close to the lower band, suggesting that sellers remain in control. Should selling pressure continue, LIT risks breaking below the $1 support level and could potentially slide to around $0.96. Conversely, a price recovery above $1.30 could shift momentum, which aligns with the current position of the Parabolic SAR.

Conclusion

In summary, while Lighter's buyback strategy indicates a proactive approach to countering market challenges, the prevailing bearish sentiment and declining revenue present significant hurdles. The next movements in LIT’s price will largely depend on whether buying volumes can recover against the backdrop of ongoing selling pressure.