Hanging around $10,500, bitcoin gained substantially as compared to the previous year. But 2019 can’t be marked as the year of bitcoin as it failed to compete with the likes of another cryptocurrency, Litecoin, that is up more than fourfold since the beginning of this year.
Fourth largest market cap cryptocurrency, Litecoin has successfully outperformed, in addition to bitcoin, Ethereum and ripple as well. With the market cap of more than $8.7 billion, Litecoin has risen more than 466% since the start of 2019.
LTC traded below $30 at the end of last year but now after the price surge, it is trading at $140. In contrast to the growth of Litecoin, bitcoin and Ethereum couldn’t even manage half of what Litecoin achieved. While bitcoin has managed to increase its price by 120%, Ethereum’s growth is approximately 100% since the beginning of 2019.
Experts believe that due to the halvening, Litecoin’s price showed such a great development. Halvening is an event after which the award given to the miners of cryptocurrency is halved. At the moment, miners are receiving 25 Litecoin for mining a block but after the 6 August, the award will be shrunk to 12.5 Litecoin per block. It is suggested that as the supply of Litecoin decreases, according to the fundamentals of supply and demand, the price of Litecoin increases.
4 years ago, before the first halvening of Litecoin, the cryptocurrency saw about 60% gains. President of ProChain Capital David Tawil also confirmed the possibility of a rise in the price of litecoin because of the halving phenomenon. In this regard, his words read:
It’s just a question by how much does it gain?…. Is it reasonable to think that this halving, this catalyst, should allow the Litecoin to reach its previous highs? I think so. I think it could.
Previously, Litecoin saw a fluctuation that didn’t go in the favor of litecoin investors and users. During the bull run of 2017, Charlie Lee who is the founder of Litecoin withdrew his holdings due to a conflict of interest. Lee claimed that he was accused of shorting the Litecoin so that’s why he decided to liquidate his assets to leave no doubts for people that he can impact the price of Litecoin. Consequently, after his liquidation, the price of Litecoin declined. However, this time, following the halvening, the investors are hopeful for the Litecoin’s price to shoot upwards.
The after effects of halvening, not only limited to litecoin, are very detrimental to the price of a digital cryptocurrency. Up till now, bitcoin has had two halvenings and next year in the month of May, bitcoin halvening will occur again.
If paid closed attention, there’s a pattern that repeated itself after the first two halvenings and is expected to happen again after halvening taking place next year. After bitcoin’s first halvening, the price of bitcoin attained a high i.e., $1,000 after 12 months. Similarly, after the second halvening in 2016, bitcoin achieved its all-time high in 2017. Quite evident in previous halvenings, 2020 is anticipated as the year of bitcoin.
Many experts in the space also believe that bitcoin’s price will attain a new high after going through its third halvening. Mati Greenspan, a senior market analyst at eToro, also suggests rising of prices after the event of halvening. While commenting on the consequences of halving on the crypto market, he said:
Every time we’ve seen a halvening event in Bitcoin or Litecoin, the price has risen astronomically. So if that pattern continues, what we’ve seen so far is small potatoes in comparison. This is quite normal for the crypto market.
With big companies such as Visa and Facebook entering the crypto space, general perception and impression for cryptocurrencies are likely to change. In addition to the competition of several other cryptocurrencies, litecoin and bitcoin going against each other will be a top debate.
According to Aaron Brown, an investor and contributor for Bloomberg, litecoin “only thrives if Bitcoin is valuable”. Further linking the success of litecoin to be driven by bitcoin, Brown elaborates:
It’s (Litecoin) an established, convenient transaction currency well suited to a world in which Bitcoin is the store of value. I don’t think it has much value in a world in which Bitcoin prices are low.
There’s still a lot of time for bitcoin halvening but litecoin’s halvening is around the corner. Litecoin has marked its spot for now but the cryptocurrency has a long way to go for being the top performing cryptocurrency of 2019. It will be of interest for crypto enthusiasts to see what future events such halving hold for litecoin and bitcoin.