Halving LTC
Litecoin can be attributed to one of the oldest cryptocurrencies, the concept and technical structure of which is extremely similar to Bitcoin. In addition to the PoW consensus algorithm and the initial cap that limits total coin issuance, the model of reducing the reward for miners is similar;
On August 2, 2023, at a block height of 2 520 000, the third reduction in Litecoin’s reward for miners (as well as the rate of issuance) from 12.5 LTC to 6.25 LTC took place since the altcoin’s launch. Past halwings have occurred in August 2015 (award reduction from 50 to 25 LTC) and August 2019 (award reduction from 25 to 12.5 LTC), i.e., at four-year intervals or every 840 000 blocks. At the same time, about 87% of all LTC of the total issue is already in circulation. By the way, the total issuance in Litecoin is four times higher than that of the Bitcoin network – 84 million LTC versus BTC’s 21 million.
Technical analysis
In June 2022, Litecoin reached its lowest value in two years – $40.33. After that, a prolonged upward spurt began, which lasted for 238 days. It was only stopped in mid-February 2023 when “digital silver” reached $105.67. By large – since that time it has been the stumbling block to further growth.
Some might argue, “But Litecoin was going above $110!”. And they’d be absolutely right;
The problem is that the trend didn’t pan out after that, and Litecoin spent only four days above $105.67 and has been below that value for almost a month now. The level breakdown in this case turned out to be more of a bear trap.
The fact that the level in the $105 area is important is also evidenced by the fact that twice in July, on the 13 and 30 dates, Litecoin approached this mark. Obviously, overcoming this resistance should lead to an increase in the price of digital silver. An important indicator can add positivity: Litecoin is trading above the 50-day moving average (marked in blue). The resistance level is $87.41.
Source: tradingview.com
Litecoin outlook
Litecoin creator Charlie Lee, as well as traders Peter Brandt (Peter Brandt) and Bluntz predicted growth on the back of the halving trend. At the same time, experts were unanimous in their opinion: Litecoin will trade above $110.
Well, that’s what happened in early July. But as of Aug. 2, Litecoin’s price is only $92.24, down 16% from $110. The open interest indicator, which shows the number of futures contracts on investors’ hands, has been rising since July 8. The current value is over $578 million, compared to less than $475 million three weeks ago. What does this tell us? Open interest is rising but price is not, hence we can expect further declines in the short term.
Source: coinglass.com/
With bearish sentiment prevailing among Litecoin holders, the fall, even if there is one, shouldn’t be deep. This is evidenced by the decline in the 14-day ATR volatility indicator.
Source: tradingview.com
Conclusion: what to expect next
If we look back at past price levels during Litecoin’s halving moments, we can note the asset’s rise in value. At a height of 840 000 blocks, or at the drop of the award in 2015, the LTC exchange rate was approximately $2.91. Four years later, at an altitude of 1 680,000 blocks, the course corresponded to a value of approximately $96.83 (an increase of more than 33 times). The current value, as you can see, is even lower than the August 2019 level.
On the other hand, the deflationary nature of LTC may speak in favor of possible growth in the long term. In addition to the significant amount of coins in circulation that have ever been and will be mined (over 87%), there is a tendency for some users to lose access to private keys. And consequently, “taking out of circulation” that proportion of coins in general.
It is also worth noting the increased interest in the asset from miners. The network’s aggregate hashrate level has continued to rise steadily over the past few years, with the current value standing at 822.5 terahashes per second. Thus, more and more of the computing power involved is being put into LTC pricing. And although fundamental factors like halving and hash rate can speak in favor of the coin, the current dynamics of the value does not allow us to talk about a change of trend from a downtrend to an uptrend.
This material and the information in it does not constitute personalized or other investment advice. Editorial opinion may not coincide with the opinions of the author, analytical portals and experts.