In the world of cryptocurrencies, the recent focus of attention has been Litecoin (LTC). Despite the anticipated “halving” event that happened, Litecoin’s price plunged down to an unfortunate one-month low of $86.
In the shimmering sea of cryptos, LTC has always held a unique distinction as the digital silver, often contrasted with Bitcoin (BTC) – fondly called the digital gold. But their similarities dwindle when we take a closer look at their price behaviors around halving events.
For those new to the term, ‘halving’ is a pre-scheduled event which slices down miner rewards into half, effectively reducing the supply of new tokens. This event, although it happens in the life of both Litecoin and Bitcoin about every four years, plays diverging roles in their price dynamics.
Bitcoin, historically, has made its bullish move post the halving, while Litecoin’s trajectory differs considerably. In the two past halving occurrences, Litecoin’s price spiked roughly a month prior to the event and then tumbled for months to follow.
Identifying this deviating pattern, Greg Cipolaro, the global head of research at a notable digital asset investment firm, highlighted that Litecoin works on an “anticipation cycle.” It nests a pulsating anticipation, ticking to a peak before spiraling down into the halving, only to find its bottom thereafter.
This phenomenon was observed this time too when Litecoin, in run-up to the halving, surged to as high as $112 on July 3. Hitting its highest price for the year, the token’s value then witnessed a 22% decline, just around a month before the halving event.
While this repeats a historical pattern, it’s a call to question the efficacy of halving as a price lifter. For Litecoin holders, the plunge following the spike, in the shadow of the halving event, could irrigate worries about the asset’s future growth expectations. Conversely, for prospective investors or miners, the drop could open the doors of opportunity, given the historical rebounds following the trough.
In the final analysis, Litecoin’s contrasting response to halving highlights the diverse mechanisms at work within the ever-evolving world of cryptos. This further emphasizes the importance of comprehensive research when entering such dynamic markets. As in other spheres, understanding history could hold the key to predicting future outcomes. A recurring pattern, after all, does not lie.
Source: Coindesk
