Why is Litecoin Doing so Well?
Today Litecoin is up 62% on the month, 24% on the week and a solid 200% on the year. Its price has dipped a tiny 2% at the time of writing, but it is still possible to say that Litecoin has been doing remarkably well during this latest surge in the crypto markets.
Litecoin began 2019 at around $30, representing a dramatic plunge in price during 2018. As ever, people are looking for explanations for this reversal of fortune. Billy Bambrough, writing at Forbes believes that it may in part be due to the upcoming halvening of bitcoin, which will happen in May next year. Halvenings always seem to trigger a price surge. The bitcoin event will result in he number of bitcoins awarded to miners for mining new bitcoin blocks will drop from 12.5 bitcoin to 6.25 bitcoin. “We are going to hoard bitcoin at this point in time,” Brian Kelly, a bitcoin and cryptocurrency fund manager told CNBC. “We’re not going to sell it. You generally have a rally a year into [a bitcoin halvening], and a year out of it. And so we’re just at the beginning of that stage […] a supply cut is generally bullish.”
A halving and more use of litecoin
Litecoin is due to halve its miner rewards in August of this year, and if the economic theory applied to bitcoin’s supply reduction due to the halvening are correct, it will also apply to litecoin, which will see its mining reward fall from 25 litecoin to 12.5 litecoin.
What has happened during previous bitcoin halvenings, which are fixed events that occur after every 210,000 blocks have been mined. For example, about one year after the first bitcoin halving event in November 2012, the bitcoin price reached what was then an all-time high of $1,000. And the 2016 halvening appeared to precipitate the bull run of 2017 when bitcoin touched almost $20,000.
But it isn’t just Litecoin’s upcoming halvening that has boosted its price. Over the last few months litecoin has gone through some technical improvements and it is being spent via Coinbase Visa cards at millions of locations worldwide. Coinbase users can choose which cryptocurrency is used on the card through a new app that supports all crypto assets available to buy and sell on the Coinbase platform. The app also offers instant receipts, transaction summaries, and spending categories, to help people keep track of their spending.
Litecoin has been seen as one of the most credible rivals to bitcoin for some time; perhaps this is the year when it finally asserts itself as a serious contender in the crypto market.