Key Insights Ahead of Litecoin (LTC) Halving 2023 - Will Litecoin Lead Bitcoin in Price?
With just a few hours remaining before the third Litecoin (LTC) halving event, here are some quick facts about the upcoming event that you should know.
Key Insights Ahead of Litecoin (LTC) Halving 2023 - Will Litecoin Lead Bitcoin in Price?
What is Litecoin Halving? Event Timeline for Reward Reduction for Miners
The third Litecoin halving event in history is set to commence in the early hours of August 3, 2023. Litecoin halving occurs every four years on a fixed schedule, bringing a significant change by reducing the block reward for miners from 12.5 LTC to 6.25 LTC.
Litecoin Halving Timeline
Meanwhile, halving is a term referring to an important tokenomics mechanism used by projects utilizing Proof-of-Work like Bitcoin and Litecoin. It aims to decrease the rate of new coin issuance through block creation/mining activities, gradually reducing BTC/LTC rewards per block after each halving. By 2027, the reward per block will further decrease to 3.125 LTC.
Chart of LTC Mining Rewards Post Halvings
Supply Differences: Can Litecoin Serve as a Predictor for Bitcoin?
There's a saying, "If Bitcoin is gold, then Litecoin is silver," implying that Litecoin mirrors Bitcoin's price action. However, in reality, Litecoin halving does not impact the market as significantly as Bitcoin for several reasons:
Market Capitalization Disparity
Litecoin boasts a market capitalization of $6.6 billion, whereas Bitcoin, the king of cryptocurrencies, commands a market cap nearing $560 billion, over 85 times larger.
Differences in Scarcity
Litecoin has a fixed supply of 84 million LTC, while Bitcoin is capped at 21 million BTC (1/4th of Litecoin's total supply). Hence, Bitcoin's scarcity continues to increase compared to LTC.
As of the time of writing, there are still 11.5 million LTC yet to be mined, which is over six times the remaining supply of Bitcoin. Another fact is that Litecoin entered the market about three years after Bitcoin, placing it behind Bitcoin across several metrics.
Mining Difficulty Differences
According to BitInfoCharts data, Litecoin's network hashrate stands at 793 TeraHash/s, while Bitcoin's is 356 ExaHash/s, making BTC mining significantly more challenging by thousands of times compared to LTC.
Price Fluctuations of Litecoin During Previous Halving Events
The first Litecoin halving occurred in 2015, followed by 2019. Both instances saw LTC prices peaking several months before the halving. Specifically, LTC surged by 824%, reaching nearly $10 before the 2015 halving, and increased by 525%, peaking at $146 in 2019.
LTC Price Movement Pre and Post 2015 Halving
LTC Price Movement Pre and Post 2019 Halving
If history repeats itself, the $115 USD threshold LTC reached at the end of June 2023 might be this cycle's peak price as mentioned earlier. Following halvings, LTC prices tend to temporarily reverse and undergo significant corrections over subsequent months.
1D Chart of LTC/USDT Pair on Binance on August 2, 2023
Potential Decline in Miner Participation Post-Halving
The halving event will significantly impact the earnings of miners and cryptocurrency mining firms. With miner profits halved while mining difficulty remains constant, the Litecoin network may witness a substantial decline in miner participation in the near future.
Conclusion
Overall, Litecoin's halving event will likely have a lesser impact on the entire cryptocurrency market compared to Bitcoin's halving. However, for LTC investors, this remains a crucial event to monitor and stay informed about.
