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Lisk Price Analysis – The potential bottom of a bear trend

Technicals for the LSK/USD pair show a potential trend reversal over the next few months. Trend indicators including Pitchfork, EMAs, and Cloud show the potential for a US$2.60-US$3.20 target over the next year.

Lisk (LSK) is a deployable blockchain ecosystem capable of running smart contracts. LSK currently 39th on the BraveNewCoin market cap table, while down 96% from the record high established in January 2018, with a current market cap of US$145 million, and a total of US$3.7 million in trade volume over the past 24 hours. Analogs to the LSK network include Ethereum (ETH), EOS (EOS), Tron (TRX), NEO (NEO), Ark (ARK), and Zilliqa (ZIL).

While created by Max Kordek and Oliver Beddows, LSK was initially forked from the Crypti codebase, a project which raised 750 BTC in July 2014. The LSK ICO ran for one month from late February 21 to late March 2016 with just over 3,900 participants raising 14,052 BTC or US$6,472,497 at that time. The LSK token price during the ICO was US$0.076. Initially, 100,000,000 LSK were created with 85% sold in the crowdsale and the remaining 15% of tokens split between the Lisk core team, post-ICO campaigns and bounties, advisors, partners, third parties, and early supporters.

Lisk also has a non-profit foundation which currently holds US$26.377 in assets split between 7.88 million LSK tokens, all of which originate from the non-crowdsale tokens, and a basket consisting of 3,200 Bitcoin, 8,489 Bitcoin Cash, 8,489 Bitcoin Gold, and 62,000 GBYTE tokens.

Lisk Price Analysis 20 Feb 2019 (1)

The LSK mainnet launched in August 2018 and uses the delegated Proof of Stake consensus mechanism, a model created by Dan Larimer whose other projects include BitShares (BTS), Steemit, and EOS. The blockchain is open source with most of the development work coming from the Berlin-based software company Lightcurve. Late last year, Lisk announced plans to open a LiskCentre in Utrecht, the Netherlands, which will act as a blockchain incubator for enabling the adoption of Lisk-based applications.

The LSK ecosystem runs in TypeScript, a superset of the JavaScript executable programming language. The network has 101 delegates, or validators, 1,766 nodes, and a 10 second blocktime. The top 14 addresses own 42% of the circulating LSK supply and 51% of the circulating supply currently staking on the network. The yearly staking yield is 4.04%.

The block reward is currently three LSK with a block reward reduction set for October 17th, 2019. Every 3,000,000 blocks, or one year on average, this reward is reduced by 1 LSK, ending at 1 LSK per block in perpetuity. The block rewards are equally distributed among all 101 delegates, who also receive transaction fees. Non-delegate nodes stake LSK by voting for the 101 delegates and receive reward sharing set by the delegate. Other than the 101 main delegates, non-delegate nodes remain on standby to ensure 101 delegates validating the network at all times.

The number of transactions per day on the network (line, chart below) decreased throughout 2018 and is currently holding at August 2017 levels. The average transaction value per day (fill, chart below) has also decreased throughout 2018 and is sitting at yearly lows after reaching a high of US$11,000 in late February 2018.

Lisk Price Analysis 20 Feb 2019 (2)

The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) has increased since late December. Inflection points in NVT can be leading indicators of a reversal in an asset’s value. A clear uptrend in NVT suggests a coin is overvalued based on its economic activity and utility, which should be seen as a bearish price indicator, whereas a downtrend in NVT suggests the opposite. An NVT holding below 50 would likely signify bullish market conditions.

Active and unique addresses are important to consider when determining the fundamental value of the network when using Metcalfe’s law. Daily active addresses (DAA) have risen slightly (fill, chart below) since the beginning of the year and declined throughout most of 2018. DAA still remain at high levels historically.

Furthermore, there are three LSK-related job postings on LinkedIn. There are almost over 1,700 members in seven LSK groups on and over 30,500 subscribers on Reddit’s /r/Lisk.

Lisk Price Analysis 20 Feb 2019 (3)

Turning to developer activity, the Lisk project has 33 GitHub repos with a cumulative 3,600 commits over the past year. Lisk Core 1.4.0 was released in early January and brought minor bug fixes. The Lisk roadmap is descriptive and vast, with years of development in the pipeline.

Most coins use the developer community of GitHub where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

Lisk Price Analysis 20 Feb 2019 (4)

LSK exchange traded volume is dominated almost entirely by the Bitcoin (BTC) pair with the Korean Won (KRW) pair also carrying significant volume comparatively. A majority of the volume occurs on YoBit and CoinEgg. LSK has traded on Bittrex and Poloniex since May 2016 and Binance since November 2017. Non- exchange custody solutions for LSK include the LSK desktop and mobile apps developed by the Lisk team.

Lisk Price Analysis 20 Feb 2019 (5)

Google Trends for the term "Lisk" remain down sharply, with a small spike in September. A slow rise and large spike in searches for "Lisk" preceded the bull run in Q4 2017, likely signaling a large swath of new market participants at that time. A 2015 study found a strong correlation between the google trends data and bitcoin price, while a 2017 study concluded that when the U.S. Google "bitcoin" searches increase dramatically, bitcoin price drops.

Lisk Price Analysis 20 Feb 2019 (6)

Technical Analysis

Lisk has essentially held a 45 degree downtrend throughout 2018 with very little bullish momentum in sight. As price begins to range for an extended period of time, a trend reversal becomes possible. As price approaches key resistance levels, price roadmaps can be found on high timeframes using exponential moving averages (EMAs), volume profile of the visible range (VPVR), Pitchforks, Ichimoku Cloud, and chart patterns. Further background information on the technical analysis discussed below can be found here.

On the daily chart, the 50/200EMAs have been bearishly crossed since early March. The current spot price is currently far below the 200EMA and sitting just above the 50EMA. A sustained break of the 50EMA resistance suggests a push toward the 200EMA at US$1.62. If the bullish momentum is sustained, a rally toward the horizontal VPVR resistance at US$2.60 to US$3.20 zone becomes more likely. There are no active volume or RSI divergences at this time. LSK has also recently broken a bearish Pitchfork with anchor points in December 2017, and March and May 2018, suggesting a potential bullish reversal.

Lisk Price Analysis 20 Feb 2019 (7)

Turning to the Ichimoku Cloud, four metrics are used to indicate if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

Cloud metrics on the daily time frame, with doubled settings (20/60/120/30) for more accurate signals, are bearish; price is below the Cloud, the Cloud is bearish, the TK cross is bearish, and the Lagging Span is below Cloud and on price. A traditional long entry will not trigger until price is above the Cloud, which has not been the case since early 2018. If price enters the Cloud with a bullish TK cross, price will likely move toward the opposite end of the Cloud at US$2.10. This is known as an Edge to Edge trade.

Lisk Price Analysis 20 Feb 2019 (8)

Cloud metrics on the 12 hour time frame, with doubled settings (20/60/120/30) for more accurate signals, are neutral; price has recently punched through the Cloud, the Cloud is bearish, the TK cross is bullish, and the Lagging Span is below Cloud and above price. Again, a traditional long entry will not trigger until price is above the Cloud, which has not been the case since August 2018.

Lisk Price Analysis 20 Feb 2019 (9)

Also on the 12 hour chart, multiple bullish reversal patterns are attempting to form; an inverted Head and Shoulders (iH&S) followed by an Adam & Eve (A&E) double bottom. The hallmarks of the H&S reversal pattern include a descending volume profile and a series of at least three extreme lows, with the second low exceeding the first and third low. The hallmarks of the A&E pattern include a descending volume profile but with V and U-shaped price action which increased in volume once resistance is broken. Price targets for the patterns roughly match VPVR resistance zones.

Lisk Price Analysis 20 Feb 2019 (10)

Lastly, on the LSK/BTC pair, the trend is definitively bearish with a rounding price structure, which is suggestive of a Falling Wedge bullish reversal. The 200EMA, Cloud, and VPVR horizontal resistance all sit at the 43,500 sat level. If price can break this zone on high volume, a bull trend will likely commence with heavy resistance at the 77,000 sat level. Based on previous price history, LSK will likely range dramatically between 45,000 and 150,000 sats.

Lisk Price Analysis 20 Feb 2019 (11)


Fundamentals show little network use other than speculative demand with most of the network tokens owned by very few individuals. Increased token distribution and an improved dApp economy will increase organic demand but this is likely years away from reality. The Lisk team is well funded, based on their own report, and has an extensive roadmap going forward. With continued network development and improvements, Lisk may one day become a real competitor in the PoS blockchain space.

Technicals for the LSK/USD pair show a potential trend reversal over the next few months. Trend indicators including Pitchfork, EMAs, and Cloud show the potential for a US$2.60-US$3.20 target over the next year. The LSK/BTC pair also shows the potential for the bottom of a bear trend but is unlikely to break the 45,000-150,000 sat range any time soon. LSK will also undoubtedly benefit greatly from a broader alt coin bull market.


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