Disclaimer: The information presented does not constitute financial, investment, trading or other advice and represents the opinion of the author only.
The third edition of Litecoin [LTC] the halving took place on August 2 when the network reached a block height of 2,520,000, which reduced miner rewards from 12.5 LTC to 6.25 LTC.
LITECOIN HAS HALF ITS BLOCK REWARD!
⚡ $SLD ⚡ pic.twitter.com/iemCnkPsdu
—Litecoin (@litecoin) August 2, 2023
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Even though it was a major development, the price of Litecoin did not have a positive reaction.
Despite the cryptocurrency’s first-mover advantage in this space, Litecoin hasn’t seen much activity or interest since the start of the year.
glass half full
The halving is a significant event scheduled in some cryptocurrency protocols, including Litecoin, which takes place at regular intervals. During this event, the block reward given to miners for validating transactions and securing the network is halved.
The main purpose of the halving is to control the rate of issuance of new coins and manage inflation within the cryptocurrency system.
The impact of the halving is twofold. First, it introduces an element of scarcity into the cryptocurrency ecosystem. With reduced block rewards, the rate at which new coins are introduced into circulation is decreasing.
This creates a feeling of scarcity among market participants, which could lead to an increase in demand for cryptocurrency.
Second, the halving affects mining rewards for miners. As block rewards are halved, miners receive fewer coins for their mining efforts. This can lead to lower mining profitability, especially for miners with higher operating costs.
Some miners may be forced out of the network if the mining costs exceed the rewards, which could lead to a temporary drop in the network’s hash rate and overall security.
Litecoin, as it completes its third halving since its inception in 2011, will experience a reduction in its supply rate. This will lead to fewer new Litecoins being mined. This scarcity factor could trigger increased demand and speculative activity in the cryptocurrency market.
Additionally, miners will have to adapt to reduced mining rewards, which may impact their profitability and mining operations.
ChatGPT makes a comparison
It is expected that the halving could help Litecoin gain more market share in the PoW sector. To make a comparison, I consulted ChatGPT to highlight the different differences of the multiple PoW cryptocurrencies and their various advantages.
According to the AI bot, Litecoin’s focus on faster transactions and lower fees is likely to attract more users and investors. As transaction volumes increase, network activity for Litecoin could increase, furthering its appeal as a fast and profitable digital currency.
However, the inflationary nature of Dogecoin contrasts with the scarcity of Litecoin induced by the halving. Although Dogecoin has strong community and viral appeal, concerns about dilution from its inflationary supply could favor Litecoin in the short term.
Meanwhile, users who value privacy and anonymity are more likely to stick with Monero due to its unique privacy features. However, for those who prioritize speed and lower fees, Litecoin could be a convenient alternative.
About Ethereum Classic [ETC], its focus on immutability and code-as-law principles could attract a distinct audience compared to Litecoin’s user base. The short-term benefit for each cryptocurrency would depend on specific use cases and user and investor preferences over that time period.
Source: ChatGPT
Does Litecoin have a competitive advantage?
A recent regulatory review against various cryptocurrencies has negatively impacted various altcoins. However, Litecoin was one of the few altcoins to be considered a commodity in the lawsuit against Binance. [BNB].
On March 27, 2023, the United States Commodity Futures Trading Commission declared that $SLD is a “commodity”.
—Litecoin (@litecoin) July 21, 2023
After asking for ChatGPT’s opinion on this development, he said that CFTC’s classification of Litecoin as a commodity could have several benefits. Regulatory clarity would give market participants defined guidelines, enhance Litecoin’s legitimacy, and generate institutional interest.
This could increase liquidity, as exchanges could list Litecoin more easily, expanding its accessibility. Additionally, this may lead to the emergence of potential derivatives and investment products tied to the price of Litecoin, providing diversified investment opportunities.
CFTC recognition may also influence global acceptance and adoption, supporting the growth of Litecoin.
Source: ChatGPT
The price tells a different story
Despite these factors, LTC price was not very green at press time. Its price had fallen by more than 12% in one week. It was trading at $82.42 at press time.
Reading Litecoins [LTC] Price Prediction 2023-2024
But LTC’s Relative Strength Index (RSI) and Money Flow Index (MFI) were above the neutral bar of 50, It is On Balance Volume (OBV) showed a downward trajectory.
Source: LTC/USD, TradingView
In conclusion, his on-chain metrics show that a bearish price move is imminent.