The reward is less – the benefit is greater: what is the reason for the growth of the Litecoin rate

halving

Litecoin can rightly be considered the “little twin brother” of the first cryptocurrency. Here everything is technically and conceptually similar: limited emission, Proof-of-Work (PoW) consensus protocol, as well as a similar pricing model based on halving. It is the last one that should take place on August 2. But what does he represent?

Halving (from the English “half” – half) is a decrease in the reward for a new block found, most often by a factor of two. There have already been four such events in the history of Litecoin. Initially, in 2011, a miner was rewarded with 50 LTC for block mining. Then every four years (or 840,000 blocks) there were halvings: in 2015 and 2019. The reward was accordingly first reduced to 25 LTC, and then to the current 12.5 LTC. From August 2, it will decrease to 6.25 LTC.

Usually halvings lead to an increase in the price of a particular cryptocurrency. Simple economics works here: supply decreases, but demand does not disappear, and in the long run it can grow at all. This is especially noticeable in relation to Bitcoin: for a long time, many enthusiasts have paid attention to the correlation between halving and the price of BTC. Sometimes, due to prevailing demand and a gradual decrease in emission against the background of its limited nature, BTC is even spoken of as a “deflationary” coin.

What about Litecoin? Has the expectation of the upcoming halving in 2023 affected its value? Or maybe Litecoin has its own economy and no one reacts to it?

Technical analysis

The fact that there is activity on the eve of the halving is unequivocal. In the last week alone, Litecoin has added 28.75% in price, and since the beginning of the year, the numbers are even more impressive – 60%. In general, the growth began in November 2022, and since then the coin has grown by almost 135%.

In many ways, the growth in value in recent years was determined by large players – whales. So, according to Santiment platform, in the period from June 26 to June 30, holders who have from 1 to 10 million coins on their account, increased their balances for 430,000 LTC.

A number of experts believe that the bullish trend in Litecoin on the market will continue. For example, the creator of the cryptocurrency, Charlie Lee, believes that a 700% rise is possible. Besides, in his opinionLitecoin will add 10% relative to bitcoin.

Famous trader Peter Brandt responded about the coin more restrained. He noticed the fact that Litecoin broke through the $110 resistance level, which should now become support. This also indicates a bullish trend.

A trader under the pseudonym Bluntz named a more specific goal of Litecoin. He thinksthat $140 is quite achievable.

“I think LTC is gearing up for the halving after all. An attempt to break out of the 195-day range against the dollar, as well as an apparent return to the previous range against BTC, indicates a move to the top of the range. Another asset that I am ready to hold for a long-term swing, ”the trader writes.

According to the technical analysis, Litecoin really looks good. The coin is trading above the 50-week moving average (marked in blue). Not so long ago, the annual high of $105 was broken, which for a long time was a resistance level, and now it has become a support. The next targets for Litecoin may be the highs of March and February 2023: around $135 and $145, respectively.

Source: tradingview.com

The price of Litecoin is now just under $111. The growth of the rate recently allowed LTC to return to the top ten largest cryptocurrencies in terms of capitalization. At the time of writing, the coin ranks ninth with over $8.1 billion.

But more than one halving is at the heart of Litecoin’s takeoff. What else led to the outbreak of interest in the coin?

Legislative regulation

The first thing worth noting is that Litecoin was not affected by the attacks of the US Securities and Exchange Commission (SEC) on crypto assets in lawsuits against the Binance and Coinbase exchanges. The cryptocurrencies mentioned in the designated documents as securities came under selling pressure. Litecoin was able to avoid a similar fate.

The second is the approval of the Canadian government for unlimited trading of Litecoin on local exchanges. About it reported on the eve of the holiday “Canada Day”, which took place on July 1.

“Canada has approved LTC and three other cryptocurrencies for unlimited trading on exchanges. Other cryptocurrencies still have an annual cap of $30,000,” the tweet said.

Also, a number of experts believe that Litecoin may be affected by the resolution of the SEC case against Ripple. For example, cryptanalyst Scott Melker (Scott Melker), known under the pseudonym “The Wolf of All Streets”, said that now either the crypto industry will repay the debt, or America will be left with four available cryptocurrencies: BTC, ETH, BCH and LTC. The expert is of this opinion, since the head of the SEC, Gary Gensler, considers these coins to be commodities, not securities.

Melker’s point of view can be viewed in different ways. On the one hand, if he is really right, then this plays into the hands of Litecoin, as there will be a redistribution of assets in the US. On the other hand, if Ripple really loses the trial, then there is no guarantee that the authorities will not get to LTC in the future. Although they won’t even if Ripple wins.

Thus, the growth in the value of Litecoin is mainly due to the upcoming halving. In this regard, purchases of coins by large players began. The fact that legislative restrictions did not directly affect LTC also contributed.

This material and the information in it does not constitute individual or other investment advice. The opinion of the editors may not coincide with the opinions of the author, analytical portals and experts.