Since FTX filed for bankruptcy, Litecoin LTC/USD has outperformed all other cryptocurrencies, rising 57% compared to Ethereum ETH/USD, which rose 12%, and Bitcoin BTC/USD, which gained just 3%.
What Happened: The rally can be attributed to the upcoming LTC halving in mid-2023 when the block reward will be slashed from 12.5 LTC to 6.25 LTC, according to Delphi Digital, a crypto research platform.
“With a market starved for narrative, the LTC halving may capture the attention of market participants and could pull liquidity away from other tokens,” the analyst note said.
In the lead-up to the August 2019 halving, LTC experienced a surge of more than 500% in a 200-day period, peaking two months prior to the event. If a similar scenario were to play out from June's low of $53, then prices could potentially reach an interim high of $265.
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What Is Halving: It is a deflationary mechanism programmed into the cryptocurrency’s network. So, every four years the rewards miners receive for generating blocks are halved.
This is not beneficial for miners, but it assists in reducing the amount of newly created coins. This consequently amplifies the worth of existing LTC that can be mined, as there are now half as many.
In 2015, the inaugural Litecoin halving happened in August, where the miners' rewards per block were decreased from 50 LTC to 25 LTC. In August 2019, the second halving occurred and the miners' reward was further reduced to 12.5 LTC.
In August 2023, Litecoin is scheduled to experience its next halving, which will result in a decrease in the rewards for miners to 6.25 LTC, representing a 50% decrease from the current rate.
Price Action: At the time of writing, LTC was trading at $80.53, down 4%, according to Benzinga Pro data.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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