Quick Links
Litecoin (LTC) is burning bright in the midst of the crypto market’s FTX-induced disarray. And the cryptocurrency’s outperformance could be attributed to an impending positive shift in its supply trajectories. At the time of writing, LTC had a daily gain of 13.62% while the weekly gain has mounted to nearly 40%.
Since the past day, the price level had a sudden uptick from $60 to $82. But what caused this sudden surge for Litecoin amid the current market conditions which are still having the dark clouds of significant stakeholders being vulnerable to bankruptcy? In this TD Daily, we will be breaking down the fundamental reason behind Litecoin’s surge.
Litecoin Halving Overshadows Current Sentiment
Litecoin is set to experience a halving event in eight months, which could explain the recent uptick in price. This would be the third Litecoin halving and is expected to have a positive effect on the coin’s supply dynamics. The halving event occurs when the mining reward for Litecoin is cut in half. This effectively reduces the amount of Litecoin that is being introduced into the market.
While this may seem like a negative change, it actually has a positive effect on the price of Litecoin. When there are fewer Litecoin available, demand increases and prices rise. This can create a positive feedback loop that drives up prices even further. While it is impossible to predict exactly how much prices will increase, the Litecoin halving is typically seen as a bullish event. As such, it is not surprising that Litecoin has been on an uptrend in recent months.
Litecoin Performance on Previous Halvings
When considering the historical performance of Litecoin during its past two halving events, we can notice that LTC faced a steep decline much before the halving has taken the place. However, a bit before the events has taken place there has always been a pre-halving bullish turn for LTC in 2015 and 2019, respectively.
Closing Thoughts
Halving events for Proof-of-Work protocols has been taken into positive consideration by crypto investors. Along with Litecoin, we have witnessed in the past that Bitcoin has also received positive sentiment when its halving event gets closer. This is primarily because of the scarcity created in terms of rewards being distributed to miners which aims to appreciate the per-coin price. However, the saying “buy the rumour, sell the news” in crypto investment should always be taken into consideration.
