Litecoin was once the world’s third-largest cryptocurrency by market capitalization. However, it has now slipped to the 18th position. Various factors might have led to this, especially with the overall decline in the cryptocurrency market. And it is also possible that its strong positive correlation with Bitcoin has influenced this descent.
Litecoin’s value is closely tied to Bitcoin’s, and this connection has been crucial in determining its status in the market. What’s interesting is that both cryptocurrencies share a significant event that impacts their supply and demand – the halving event.
Examining Price Movements Surrounding Bitcoin and Litecoin Halvings
Bitcoin and Litecoin share similar technological foundations and undergo halving events approximately every four years. However, while Bitcoin’s halving happens every 210,000 blocks, Litecoin’s halving occurs every 840,000 blocks.
Next year, Bitcoin will have its fourth halving event, and it will reduce the issuance from 6.25 BTC to 3.125 BTC per block. On the other hand, Litecoin’s most recent halving occurred in 2023, and its issuance decreased from 12.5 LTC to 6.25 LTC.
A historical data analysis shows that Bitcoin and Litecoin halvings have coincided with significant bull market cycles. A closer look at price trends six months before each halving and up to a year after reveals that Bitcoin has witnessed substantial gains, with a remarkable 20,000% surge taking place around the 2012 event, a 560% increase during the 2016 halving, and a rise of 780% in the 2020 episode. Interestingly, most of Bitcoin’s notable gains took place almost a year after each halving.
Litecoin’s halving events are also associated with bullish trends, although they follow a different pattern from Bitcoin’s post-halving rallies. In contrast to Bitcoin, Litecoin’s most significant price increases occurred in the six months leading up to its halvings.
Though there is no clear pattern in Litecoin’s price performance in the year following each event, there is a consistent trend in the six months before its previous two halvings. Litecoin’s price peaked at approximately 320% gains around 45 days before each halving but then lost most of those returns in the following month. Nevertheless, Litecoin managed to end the year after each event with gains ranging between 80% and 110%.
Currently, Litecoin is priced at $69.90, reflecting a year-to-date gain of 28.8%. The cryptocurrency underwent a notable rally in the first half of the year, reminiscent of the pre-halving price surges observed in its historical data.
So, Litecoin’s price tends to rise in the run-up to its halving, following a similar pattern to Bitcoin’s price movement until Bitcoin’s halving event the following year.
After Litecoin’s halving, its price consolidates and then rises in tandem with Bitcoin when it enters a bull market. The Bitcoin bull run happens within a year of every halving event.
Litecoin and Bitcoin’s Intriguing Relationship
Litecoin is often referred to as “the silver to Bitcoin’s gold” to emphasize their interconnected nature. But for the most part, there is a complex interplay of several factors that contribute to the price correlation between both cryptocurrencies.
Litecoin has proved over time that it can be as reliable as Bitcoin. Since its launch, the blockchain has maintained 100% uptime and has had no hacking incidents, just like Bitcoin.
The appeal of low transaction fees and a limited coin supply makes Litecoin even more attractive to seasoned investors and traders, contributing to its relatively lower volatility compared to other cryptocurrencies.
Additionally, being a significant altcoin, Litecoin is not only affected by Bitcoin but also by broader trends in the altcoin market. Fluctuations in market sentiment and impactful news events further contribute to the volatility of Litecoin’s prices. Positive developments can drive up prices, while negative news can definitely lead to declines.
Other Potential Factors that Could Affect Litecoin’s Price
Litecoin has marked significant milestones in recent weeks, briefly surpassing Bitcoin in terms of transaction volume, indicating heightened user engagement and growing confidence in the chain. This surge aligns with a broader uptrend observed across the entire cryptocurrency market.
Data from IntoTheBlock revealed that on November 13, the number of active addresses on the Litecoin blockchain reached a six-month high, totalling 979,550. This surpassed the previous record set in May 2023 during the launch of the LTC-20 token standard. The following day, on November 14, the blockchain attained another feat: recording transactions worth about 1.09 million and momentarily surpassing Bitcoin’s transaction count of 523,280.
These positive trends, coupled with the number of long-term Litecoin holders reaching 5.26 million, underscore a growing confidence in Litecoin as a digital asset. These developments solidify Litecoin’s standing in the competitive cryptocurrency landscape.
Adding to this momentum is the launch of Lite.Space, a platform powered by the Litecoin Foundation. Lite.Space’s mission is to catalyse Litecoin’s growth and development by providing sustainable funding for core contributors and open-source projects. The platform intends to offer grants for innovative projects that enhance the Litecoin ecosystem, support developers working on new Litecoin software, improve existing open-source projects, promote Litecoin education, and conduct research related to Litecoin.
Final Thoughts
Litecoin has seen remarkable growth with a surge in transactions and significant announcements. However, whether the market sentiment will be bullish or bearish after Bitcoin’s halving, based on patterns observed in previous halvings, remains to be seen.
The market appears to be optimistic about Bitcoin; traders and investors are hopeful for some bullish market moves either before or after the event. Thus, the period leading up to the halving will be marked by various market dynamics. While uncertainties remain, one constant is that Litecoin will largely follow the movement of Bitcoin.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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