Litecoin, a coin which has lost severely on its popularity, proves that is not dead. Moreover, it outpaced coins like Ethereum, Ripple and even Bitcoin this year with a 360% YTD growth.
A while ago, when I entered the crypto market, Litecoin was quite an honourable coin. Everyone knew about it. Nowadays, if you read the odd articles about Litecoin, you will see things such as “the coin you’ve likely never heard of”. I figured out we should look at what made an almost fourfold like this one possible and if it is a lasting growth.
Charlie Lee is the creator of Litecoin, a modified Bitcoin fork. The protocol is the same as its bigger brother’s, but the hashing algorithm used is different, even though both are PoW (Proof of Work). Litecoin uses Scrypt, while Bitcoin is working on the old-school SHA-256. At some point, it was the biggest alt coin. That is why people referred to it as the “silver” of cryptocurrencies, since Bitcoin was the “gold”. And they were not wrong. Litecoin was being more volatile and aggressive in terms of movements. Meanwhile, Ethereum and XRP have outpaced it. Despite all of this, Litecoin still is an interesting coin to own.
It has been around 2011 so you can imagine what times it has been through. Almost nobody knew about cryptocurrencies when it was launched. It lost its popularity severely when people discovered that cryptocurrencies can have features (such as smart contracts). But, apparently, investors still show an interest in it.
The first reason of Litecoin’s growth was, of course, the market trend. This year has represented a smooth exit out of the bear times, the crypto winter. This could be seen in any legitimate coin that is selling on major exchanges. Without this, we would not have seen any major growth. In fact, the trend would have probably followed up on being negative.
Crypto bull markets manifest themselves similarly with the snowball effect. What I want to mean by this is that all start following the trend shortly and the returns, at the market level, grow exponentially.
The previous reason was the most important because without it, nothing would have happened. But the reason that contributed mostly to the 360% growth of Litecoin is the fact that its halving is coming up.
If you don’t know what halvening is, it is when a mineable coin’s block rewards for the miners are cut in half. Everyone is expecting this Litecoin halvening to occur on August 6th (since it happens at a certain block number, not at a certain date).
Historically speaking, halvening brings big rallies to all coins, whether it is Bitcoin or a less popular alt coin. The last Litecoin halvening, for instance, was 4 years ago and it generated a 60% growth at that time.
Putting this into perspective, you can now see what each reason’s position is. The first one is the necessary condition: a positive environment. At the same time, 90% of the growth that occurred was due to the reason of the halvening happening in early August. It is important to understand how growth can be segregated in order to get the cause-effect relationships. This is exactly the case here, and it is crucial to understand what is going on when you are ready to invest.
Looking forward, Litecoin might come back from the dead or it might not. It is too early to determine if this growth is artificial or if more people are planning to use Litecoin, either for mining or for other reasons.
Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use this link.