The crypto market has recovered very well since the December 2021 low of $800 million total market cap, which now stands at around $1.25 trillion.
Amidst this, Standard Chartered Bank has predicted Bitcoin price to reach $100,000 by the end of 2023. This could be attributed to several factors, including traditional banks’ recent failures weakening investors’ trust in them, leading to an increased interest in cryptocurrencies. Additionally, a potential end to the U.S. monetary tightening cycle could lead to a more favorable investment environment for Bitcoin and crypto.
Not to mention, Bitcoin has its biggest bull event, halving coming in April 2024. But before the crypto king, Litecoin is all set to have its own third halving in the coming months. And ahead of the big event, LTC is enjoying some gains, having doubled from its June 2022 lows.
Litecoin, the 13th largest cryptocurrency with a market cap of $6.58 billion, has been trading at around $92 at the time of writing. According to CoinGecko, LTC/USD is currently down 78% from its all-time high (ATH) of $410.26 hit in May 2021.
While down 10% in the past week and over 12% in the past year, the crypto asset prices are still up 28% YTD. Let’s take a look at what the future holds for Litecoin.
The Resilience of Silver to Bitcoin’s Gold
In 2011, Litecoin was created by Charlie Lee, a former Google engineer, as a faster and more lightweight version of Bitcoin, with faster transaction speeds and lower fees.
The cryptocurrency was developed by making small changes to Bitcoin’s original codebase, including faster block times and a higher supply cap, creating a direct fork of its source code.
Litecoin was designed to function as a complementary network to Bitcoin but faster and more cost-effective while also serving as a reliable store of value. However, with the emergence of the Lightning Network, the narrative surrounding Litecoin has shifted somewhat.
Now, Litecoin is primarily utilized as a testing ground for potential upgrades to Bitcoin, with developers often experimenting with new features and technologies on the Litecoin network before implementing them on the larger Bitcoin network. Privacy-focused technology MimbleWimble, which enhances the security and anonymity of transactions, could be seen as an example of this.
Despite being over a decade old, Litecoin continues to be a popular cryptocurrency, having proven its resilience in the market.
One of the key reasons for Litecoin’s resilience is its strong community of supporters and developers. Unlike many other cryptocurrencies, Litecoin has a dedicated team of developers who continue to work on improving the network and adding new features. This has helped to ensure that Litecoin remains up-to-date and relevant, even as newer cryptocurrencies have emerged.
Another factor contributing to Litecoin’s resilience is its focus on practical use cases. While some cryptocurrencies are purely speculative investments, Litecoin is designed to be a usable currency that can be used to buy goods and services. This has helped give it real-world value and make it more attractive to investors looking for a cryptocurrency with actual utility.
Additionally, Litecoin has benefited from its association with Bitcoin. As one of the oldest and most well-known cryptocurrencies, Bitcoin has helped establish a broader awareness and acceptance of cryptocurrencies. This has spilled over to Litecoin, which has been able to ride the coattails of Bitcoin’s success to some extent.
Litecoin’s technical design has also contributed to its resilience. With a faster block time and lower transaction fees than Bitcoin, Litecoin is able to offer a more efficient and practical alternative to its larger cousin. This has made it a popular choice for users who want to make quick and cheap transactions without waiting for long confirmation times.
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The Major Event: Litecoin’s Third Halving
Litecoin’s upcoming halving event is a highly anticipated one in the altcoin calendar for 2023. This event can cause significant price movements surrounding the cryptocurrency and affect other crypto assets.
Halvings in cryptocurrency are events that occur after a certain amount of time or after a specified number of blocks have been mined, and they reduce the block reward that miners receive. The event cuts the rewards that miners receive for validating transactions in half.
Miners are currently receiving 12.5 LTC as rewards. This upcoming halving will further reduce the mining reward to 6.25 LTC, and after the third halving, the daily LTC production will be reduced to 3,600.
This way, the mechanism slows down the rate at which new units of a digital asset are created, ultimately leading to scarcity, increasing demand, and potentially boosting the asset’s value, following the laws of supply and demand.
Much like how Bitcoin halvings occur every four years, Litecoin halvings occur every four years or 840,000 blocks, as both share the same source code.
The countdown to Litecoin’s third halving has officially begun, with the event scheduled to occur in less than 100 days on August 2, 2023, at block 2,520,000, marking the blockchain’s third halving event.
The blockchain underwent the first halving on August 25, 2015, at a block height of 840,000, and the second one took place on August 5, 2019, at a block height of 1,680,000.
Litecoin’s halving process is expected to reduce the supply rate of LTC, which could trigger a surge in demand from investors, positively impacting the overall value of the assets.
With halving in sight, there is much speculation regarding the impact of the halving event on Litecoin’s price, with some members of the crypto community believing the asset’s value will increase following the event, while others think the halving has already been priced in, so it may have no impact.
Impact on Litecoin’s Price
Halvings are just one factor that impacts cryptocurrency prices, alongside the macroeconomic environment, correlation with tech stocks, trends in investor adoption, and business savvy of major crypto companies.
This is not all. The timing of halvings is also worth considering, as miners are increasingly relying on transaction fees for revenue as they wait for speculative market prices to catch up to profitability.
While Bitcoin halvings have historically been associated with monumental price rallies, Litecoin halvings have seen a different pattern.
This could be due to both having different investors. The price of Litecoin typically experiences a significant surge prior to its halving events, largely due to the fact that a large portion of its user base consists of speculators who engage in frequent buying and selling until the halving takes place. However, after the halving, the market often sees a sharp downturn as large holders of Litecoin begin selling off their assets.
Unlike Bitcoin, which has after-the-fact rallies, Litecoin tends to rally hard leading up to its halvings.
In the lead-up to its previous halving in 2019, LTC surged 375% after a brutal bear market in 2018. It started the year at around $30 and topped out at $143 in June 2019, just a few weeks before its halving on August 5 of that year. However, it spent the rest of the year in retreat, ending it not far off from the price at the beginning.
Despite this, when the bull market gathered pace in November 2020, Litecoin exploded, pumping to an all-time high of $410 in May 2021, preceding the crypto market peak in November of that year. There was also a similar pump in LTC prices before its August 2015 halving, with a surge of more than 440% from April to July of that year.
However, it is important to note that the sample size of Bitcoin and Litecoin halvings is still small, making it difficult to draw realistic conclusions. Also, Litecoin’s halving events fail to produce the same huge effects as Bitcoin, which historically has caused significant disruptions in the market following its halving, creating four-year cycles.
To put it succinctly, halvings are an interesting phenomenon to observe in the cryptocurrency world, but it’s important to remember that correlation does not necessarily imply causation. While halvings have historically been bullish catalysts for both Bitcoin and Litecoin, it’s impossible to predict with certainty how they will impact cryptocurrency prices in the future.
Other Developments
Besides all the anticipation and speciation surrounding Litecoin’s halving event, the project very recently achieved a significant milestone, with its network processing over 150 million transactions. The boost in transactions is attributed to the recent development activity on the Litecoin network, such as the launch of the Litecoin Card Program.
In addition, the hash rate of Litecoin has been steadily increasing since February, which has allowed the cryptocurrency to break through the $100 price resistance level.
Litecoin (LTC) has shown resilience despite facing price declines after the Terra and FTX incidents in 2022. The token has rebounded and is approaching a crucial 3-digit resistance, which could trigger a notable bull rally.
Market activity for Litecoin is on the rise, and the token recently bounced from a horizontal support level colliding with the 200 EMA. A breakout above the $100 resistance could signal a continuation of the bullish trend.
The LTC price is trading within a rising parallel channel, and a steep upswing could lead to a v-shape recovery that may surpass the major resistance at $102. However, the network is seeing a decrease in daily active addresses, which suggests that fewer market participants are involved, which could be a concerning sign for sustaining a strong rally.
Final Note
As the anticipation around Litecoin’s third halving event grows, the cryptocurrency community is keen to observe the potential impact on LTC’s value and position within the market.
While past halvings have led to substantial price increases before the event, it is crucial to consider other influencing factors such as macroeconomic trends, investor adoption, and developments within the Litecoin network.
By overcoming the $100 resistance level, Litecoin might have the opportunity to spark a significant bullish rally and reestablish itself among the top 10 crypto assets.
Litecoin has proven its resilience over the years thanks to its strong community and focus on practical use cases. As the halving event draws closer, Litecoin’s future remains uncertain, with the potential for both gains and losses.
The asset’s long-term performance will likely be shaped not only by the outcome of the halving but also by broader market conditions and ongoing technological advancements. Ultimately, Litecoin’s ability to adapt and evolve will determine its staying power in the ever-changing world of cryptocurrencies.
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