08-13-2019 icon

Litecoin Halving Results in Slumping LTC Price Performance

By Bitcoin Nigeria
Litecoin Halving

As recently as July, the cryptocurrency market seemed positively bullish on Litecoin. It was suspected that a Litecoin halving event scheduled for August 5th, would see Litecoin surge in value. Some even released Litecoin price predictions for 2020, putting Litecoin back at $400 per coin. Then halving happened. — And then Litecoin bearishly back-tracked toward $80.

What Happens During Litecoin Halving Events?

At the time of a Litecoin halving event, the number of new Litecoin entering circulation each day is reduced by half.

Before August 5th, all Litecoin miners received 25 LTC for every block of transactions they process. On August the 5th, rewards were halved to just 12.5 LTC.

What are the Effects of Litecoin Halving?

In theory, halving events are good for cryptocurrency prices. This is because halving increases the scarcity of coins. Fewer coins coming to market each day reduces the total available supply and prices eventually edge upward to reflect this.

At the same time, halving events result in some miners abandoning mining operations. Lower LTC rewards mean that mining is no longer profitable for some miners. Instead of making losses, some, therefore, elect to mine other coins instead. This adds to the scarcity of Litecoin post-halving, as a result of fewer miners bringing fewer coins to market.    

Why Hasn’t Litecoin Halving Pushed Prices Upward?

So far, the fact that Litecoin values on exchanges haven’t jumped in the wake of halving isn’t surprising. In fact, Litecoin prices are currently mirroring trends first set during the first-ever Litecoin halving event in 2015.

In 2015, the Litecoin price peaked approximately a month before halving occurred. Prices then retracted in the weeks leading up top and following halving. It was only then toward the end of 2015, that Litecoin began retesting former all-time highs.

Will Litecoin Halving Eventually Result in Price Increases?

If Litecoin continues to mirror trends first established in 2015, 100% price gains may likely be on the horizon for late 2019 and early 2020. However several variables also need to be taken into consideration.

  • Bitcoin dominance has increased exponentially since 2015. If Bitcoin dominance continues to increase, Litecoin prices may suffer as a result.
  • Previous Litecoin gains have been aided by increased consumer investor interest in altcoins. However, because so few altcoins generated returns for investors in the time since 2017, many are more cautious about investing in anything other than Bitcoin.
  • Bitcoin itself will be halving in May 2020. This could prove to overshadow Litecoin halving, leading to a prolonged period during which Litecoin trades sideways.  

Is Now a Good Time to Buy Litecoin?

Because Litecoin is currently mirroring trends first set in 2015, it can be argued that now is a good time to buy Litecoin. However, investors need to remember to do so at their own risk. If Bitcoin dominance continues to increase,  Litecoin may not generate returns for quite some time. Potential investors, therefore, need to plan either to invest long-term or not at all.