Halving
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Litecoin can be rightly considered the “younger twin brother” of the first cryptocurrency. Everything here is technically and conceptually similar: limited issuance, Proof-of-Work (PoW) consensus protocol, and a similar pricing model based on halving. It is the latter that is to be held on August 2.. But what is he?
Halving (from Eng.. “half”) is a reduction in the reward for a new block found, most often twofold. There have been four such events in the history of Litecoin. Initially, in 2011, a miner was entitled to a reward of 50 LTC for mining a block. Then every four years (or 840,000 blocks) there were halving events: in 2015 and 2019. Reward, respectively, first decreased to 25 LTC, and then to the current 12.5 LTC. From August 2 it will decrease to 6.25 LTC.
Halving usually leads to an increase in the price of a particular cryptocurrency. There is a simple economics at work here: supply decreases, but demand does not disappear, and in the long run it may even grow.. This is especially noticeable in relation to bitcoin: many enthusiasts have long noticed the correlation between halving and the price of BTC. Sometimes because of the prevailing demand and a gradual decrease in issuance against the background of its limited nature, BTC is even referred to as a “deflationary” coin.
And what about Litecoin? Has the anticipation of an upcoming halving in 2023 affected its value? Or maybe Litecoin has its own economy and no one is reacting to it?
Technical Analysis
That there is activity in the run-up to halving is unequivocal. Just in the last week Litecoin added 28.75%, and since the beginning of the year the figures are even more impressive – 60%. In general, the growth began back in November 2022, and since then the coin has grown by almost 135%.
Much of the recent growth in value has been driven by the big players – the whales. So, according to the Santiment platform, between June 26 and June 30, holders who have between 1 and 10 million coins in their account increased their balances by 430,000 LTC.
A number of experts believe that the bullish trend in Litecoin in the market will continue. For example, the creator of the cryptocurrency Charlie Lee (Charlie Lee) believes that a rise of 700% is possible. In addition, he believes 10% Litecoin will add relative to bitcoin.
Famous trader Peter Brandt was more cautious about the coin. He noticed the fact that Litecoin broke through the resistance level of $110, which should now become support. This also indicates a bullish trend;
And a trader under the pseudonym Bluntz named a more specific Litecoin target. He thinks $140 is achievable.
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“I think LTC is finally getting ready to halve.. An attempt to break through the 195-day range in the pair with the dollar, as well as an apparent return to the previous range in the pair with BTC, indicating a movement towards the top of the range. Another asset that I am willing to hold for a long-term swing,” the trader writes.
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Litecoin does look good by technical analysis. Coin trades above the 50-week moving average (marked in blue). Not so long ago the yearly high of $105 was broken through, which for a long time was a level of resistance, and now it has become support. The next targets for Litecoin could be the highs of March and February 2023: around $135 and $145, respectively.
Source: tradingview.com
Litecoin’s price is now just under $111. Growth in the rate recently allowed LTC to return to the top ten largest cryptocurrencies by capitalization. At the time of writing, the coin ranks ninth with over $8.1 billion.
But more than one halving is behind Litecoin’s rise. What else led to the outburst of interest in the coin?
Legislative regulation
The first thing worth noting is that Litecoin has not been affected in any way by the US Securities and Exchange Commission’s (SEC) attacks on crypto-assets in lawsuits against the exchanges Binance and Coinbase. Cryptocurrencies mentioned in the documents as securities came under selling pressure. Litecoin, on the other hand, was able to avoid a similar fate.
The second is the Canadian government’s approval of unlimited Litecoin trading on local exchanges. This was reported on the eve of the “Canada Day” holiday, which was held on July 1.
“Canada has approved LTC and three other cryptocurrencies for unlimited trading on exchanges. Other cryptocurrencies still have an annual limit of $30,000,” according to the tweet.
Also, a number of experts believe Litecoin could be affected by the resolution of the SEC case against Ripple. For example, cryptoanalyst Scott Melker, known under the pseudonym “The Wolf of All Streets,” said that now either the cryptoindustry will pay back the debt, or America will be left with four cryptocurrencies available: BTC, ETH, BCH and LTC. The expert holds this opinion because the head of the SEC, Gary Gensler, considers these coins to be commodities and not securities.
There are many ways to look at Melker’s point of view. On the one hand, if he is indeed right, it plays into Litecoin’s hands, as there will be a redistribution of assets in the U.S.. On the other hand, if Ripple really loses the trial, there is no guarantee that in the future the authorities will not get to LTC. There won’t be any, though, even if Ripple wins.
Thus, the rise in Litecoin’s value is due in large part to the upcoming halving. In this regard, purchases of the coin by major players began. The fact that LTC legislative restrictions were not directly affected by it also contributed to the situation.
This material and the information in it does not constitute personal or other investment advice. The editorial opinion may not coincide with the opinions of the author, analytical portals and experts.