Aaryamann Shrivastava
FXStreet
- Litecoin price has been stuck in a downtrend owing to broader market conditions, trading around $60.
- With the broader market conditions being unfavorable for investors, transaction volumes fell to a two-year low.
- This is evinced by the decline in short-term traders’ addresses, suggesting LTC is losing traction among investors.
Litecoin price is distressing investors with every passing day as the altcoin has been treading downwards since the beginning of July. Despite the halving event last month, no increase in demand has been observed for various reasons. This is considerably impacting LTC holders, who have decided to step back further, affecting the entire network.
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Litecoin price notes fresh 2023 lows
Litecoin price fell to $58.8 about 48 hours ago, marking a new year-to-date low for the silver to Bitcoin’s gold. The last time LTC was this low was back in November 2022. The downtrend that began in July has led to a 48.21% decline in the altcoin’s value, invalidating multiple crucial support levels.
At the time of writing, some recovery was observed, with Litecoin price touching $61.9, close to breaching the barrier at $63.1. Reclaiming this level is crucial for LTC as it would provide a much-needed boost for a bounce back toward the resistance at $69.5.
LTC/USD 1-day chart
However, looking at the condition of the network and investor behavior, Litecoin price is also susceptible to a further decline. If LTC slips to test $58 and falls through it, the bullish thesis would be invalidated, and the cryptocurrency could see a crash to $50.
Investors behavior makes a bearish outlook likely
The possibility of a crash can be attributed to the broader market conditions; however, a significant credit for this bearishness goes to the Litecoin holders as well. Since LTC has been struggling to find enough strength to note a recovery, investors' patience has also probably given up, which is reflected in their on-chain activity.
The transaction volume over the past week has been concerningly low, amounting to a daily average of $1.5 billion. For nearly two years, Litecoin has not seen such low averages, as the last recorded instance dates back to August 2021. As the lack of incentives continues to grow, LTC holders are seemingly pulling back from conducting transactions on the chain.
Litecoin transaction volume
This is verified by the drop in the short-term traders’ (those holding LTC for less than a month) numbers. In the past month, these traders’ addresses have seen a considerable decline, down from 500k to 430k at the time of writing. This 14% decrease suggests that Litecoin is losing traction in the market.
Litecoin addresses by time held
Although a lack of short-term traders is not harmful to the network, it may speak for the larger picture that investors’ interest is shifting from LTC. If this continues for an extended period, Litecoin price could see a bearish impact.
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Litecoin halving FAQs
When is the next Litecoin halving?
Litecoin’s third block halving event is scheduled to take place at a block height of 2,520,000, which is estimated to happen around August 3. The current block height is 2,511,587. The first halving took place in 2015 after the block height was 840,000. The second Litecoin halving event occurred in 2019 when the total block height hit 1,680,000. This event takes place roughly once every four years.
What will be the new block reward after the third Litecoin halving?
Halving is an important event for both miners and investors. After halving, the block rewards are slashed in half, as the name suggests. The first halving event in 2015 reduced the block reward from 50 to 25 and the second one in 2019 halved it to 12.5. The third halving, which is scheduled on August 3, will further reduce it to 6.25. This means that miners will go from receiving 12.5 LTC for mining a block to 6.25 LTC after the third halving.
How will halving affect Litecoin price?
After a halving event, the emission of LTCs is cut in half, which effectively triggers a reduction in the Litecoin supply. If the demand remains more or less the same, it creates a negative supply shock. The same dynamics are seen if the demand for LTC increases. Due to the reduced supply and high demand, it would trigger a rally in Litecoin price. But traders often anticipate this trend and try to get an exposure to LTC before the halving, causing a premature rally and a sell-the-news drop on the day of the event.
Why is Litecoin halving important to LTC holders?
Following a halving event, miners receive 50% fewer rewards for every block they mine and this creates scarcity in the altcoin, reducing the circulating supply of the asset. The event’s purpose is to control the inflation rate of Litecoin. Halving is therefore a key event that influences the asset’s price and market capitalization over time.
How different is Litecoin halving from Bitcoin halving?
From a technical perspective, it is not any different. But from an investor and miner perspective, there are lot of differences. For example, the concept of halving remains the same for both assets, but due to relatively lower total supply of 21 million and first-mover advantage, Bitcoin’s network effect and large market capitalization as a result has a significant impact on the crypto ecosystem as compared to Litecoin. Additionally, the effect of halving events is more pronounced for Bitcoin, because of the asset’s dominance, hence BTC halving receives more attention.
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