After a quick surge in early 2023, Litecoin (LTC -0.25%) is as soon as once more buying and selling sideways, with seemingly little or no upward momentum. It is at present valued at $85.03, down practically 80% from the all-time excessive of $412.96 it set in Could 2021.
What’s particularly troubling is that two catalysts that have been purported to propel Litecoin greater are not having any affect on the value. Whereas Litecoin is up 20% for the 12 months, it is underperforming in opposition to different main cryptocurrencies comparable to Bitcoin (BTC -2.62%), which is up 32.48% for the 12 months. So is it lastly time to surrender on Litecoin?
Litecoin halving
On March 5, Litecoin introduced that its extremely anticipated halving occasion is simply 150 days away. In a halving, the rewards miners obtain for processing transactions on a blockchain — i.e., mining — are minimize by half. This will increase the shortage of a proof-of-work crypto and the price of mining it, and in addition makes the crypto extra deflationary over time. Each outcomes needs to be favorable for individuals who maintain the tokens.
Litecoin’s halving occasions happen solely as soon as each 4 years, which is why they’re so extremely anticipated. Earlier Litecoin halvings occurred in August 2015 and August 2019, and each have been related to upward spikes in its worth. Theoretically, then, the halving coming in August also needs to be preceded by a worth spike.
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Nonetheless, no one actually appears this time round. There was a quick surge of curiosity on the finish of 2022, when traders piled into Litecoin. And, sure, it had a quick rally within the first month of 2023. However issues seem to have stalled. Litecoin is down 12% over the previous 30 days.
Catalysts that are not catalyzing
Then there’s the second potential constructive catalyst. On March 2, Litecoin introduced a brand new replace to its blockchain community that ought to have cheered traders. The replace added a safety patch to Litecoin and elevated the convenience of mining the tokens. However over the previous week, Litecoin has really declined by 12.92%.
It is simple to low cost the impression of the blockchain replace as a result of, within the grand scheme of issues, it wasn’t an enormous technological improve — in distinction to The Merge that Ethereum (ETH -1.78%) enacted final 12 months. However it’s noteworthy that the upcoming halving shouldn’t be producing extra constructive consideration. Should not Litecoin be hovering proper now?
One purpose for Litecoin’s puzzling efficiency may very well be that this can be very troublesome to time the market round a halving. Regardless that merchants and traders now know the precise date of the upcoming occasion, it is nonetheless near inconceivable to get the timing proper as a token purchaser.
Evaluation of the 2 earlier Litecoin halving occasions is all of the proof you want. Across the time of every halving, there was a worth spike, an enormous correction, and a worth decline, earlier than an eventual closing worth surge. In different phrases, merely saying {that a} halving occasion results in a worth surge is a bit misleading — it ignores the truth that an incredible quantity of volatility takes place alongside the way in which. Being only a day early or a day late might considerably impression your complete return on funding.
Make investments for the long term
The problem in making an attempt to time the market is why I believe it would lastly be time to surrender on Litecoin. As a long-term investor, I am merely not prepared to play all of the short-term market swings concerned with Litecoin, and I imagine there are different cash on the market with superior long-term development prospects.
Bitcoin, for instance, can also be a proof-of-work crypto that has a halving occasion each 4 years. However there are two key variations. One is that Bitcoin’s halving occasions comply with a way more predictable upward trajectory. One other is that Bitcoin’s long-term development prospects are clearly extra enticing than Litecoin’s. Bitcoin is a superior fee choice to Litecoin, and its international adoption fee is way greater.
Given all of the volatility within the crypto market, it is smarter to concentrate on tokens with actual long-term development tales and confirmed catalysts. For that purpose, I can’t advocate Litecoin at the moment.
Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Idiot has positions in and recommends Bitcoin and Ethereum. The Motley Idiot has a disclosure policy.
