Halving leads Bitcoin and Litecoin to very different paths

Ask Bitcoin fans about the halving and they will chanted their optimism, as the event marked the start of an epic bull run in history.

What about the Litecoin halving?

Bitcoin’s fourth halving event — which will again reduce BTC issuance by 50% — is expected to happen around this time next year. But the Litecoin blockchain split will halve in 100 days.

Halving happens every 4 years (every 210,000 blocks for Bitcoin and 840,000 blocks for Litecoin). Next, BTC issuance will decrease from 6.25 BTC ($171,000) to 3,125 BTC ($85,400) per block, while Litecoin will decrease from 12.5 LTC ($1,100) to 6,25 LTC ($550).

Both Bitcoin and Litecoin halvings have coincided with epic bull runs. Analyzing price data starting 6 months before each halving and up to 1 year after the halving, BTC has exploded: 20,000% around 2012, 560% during the 2016 halving, and 780% in 2020.

Most of BTC’s profits are realized within nearly a year of each halving. The Litecoin halving also fits into a similar uptrend, but with a very different pattern.

Unlike Bitcoin’s post-hoc rally, LTC saw its biggest gains in the six months leading up to the halving.

There does not appear to be a clear pattern of LTC price performance in the year following each event. But 6 months ago, both halvings were eerily similar.

– LTC peaked about 45 days after each halving, with an increase of about 320%.

– it gave up most of its profits over the next month.

– LTC increased from 80% to 110% in the year following each event.


Bitcoin price during Bitcoin halving

Bitcoin and Litecoin have the same source code and halving

According to Riyad Carey, a research analyst at Kaiko, the halving has been a historically bullish catalyst for BTC and LTC.

“The timing of these halvings is interesting: Ethereum’s recent phase-out of PoW has helped push Bitcoin and Litecoin hashrates to new all-time highs as miners look for alternatives.”

However, looking at the price chart reveals many problems. Bitcoin mining profits tend to decrease after each halving, so miners increasingly rely on transaction fees for income while waiting for speculative market prices to catch up to profits.

“Litecoin has been one of the top 5 coins for many years, but has since been gradually replaced by newer coins, mainly tier 1 coins. If miners look for alternatives, the price increase may cause some excitement and It is possible to attract them to bitcoin.”

The halving is really just one factor affecting the price, along with the macroeconomic environment, correlation with tech stocks, investor adoption trends, and the growing number of major cryptocurrency companies looking into business (or their ignorance).

It’s also important to emphasize that Bitcoin and Litecoin halving events don’t happen much, so it’s hard to draw realistic conclusions.

Litecoin was launched in 2011 not by hard forking the Bitcoin blockchain (as is the case with Bitcoin Cash), but by directly forking the source code.

Litecoin developers (led by founder Charlie Lee) made minor changes to Bitcoin’s original codebase. Specifically, faster block times (every 2.5 minutes on average, compared to Bitcoin’s 10 minutes) and higher capitalization of supply (84 million versus Bitcoin’s 21 million).

propose value Litecoin The original version of Litecoin was intended to act as a “sister” network that specialized in processing transactions that were smaller, faster and cheaper than Bitcoin, and acted as a store of value.

The advent of the Lightning Network changed the story somewhat. Litecoin has finally become a major test bed for potential Bitcoin upgrades, such as privacy-focused technology MimbleWimble.


LTC Price During Litecoin Halving

Despite the differences, the general concept is the same: cryptocurrency is distributed to PoW miners as payment to validate transactions and protect the network from 51% attacks.

different investor base

The halving cuts the block reward for miners in half, increasing the scarcity of the coin. As Kaiko’s Carey mentioned, the profit margins for concurrent mining are shrinking, especially in the case of Bitcoin, as there are fewer rewards for the same level of energy-intensive activity.

Unless, of course, the price increases significantly to make up the difference.

“Obviously there are speculators pouring into bitcoin, just like they bought litecoin and other coins, but I think the fundamentals of BTC are the strongest. And because the fundamentals of bitcoin are so strong, the halving happens after and It’s only natural that it wasn’t before,” said Bob Ras, co-founder of tokenized securities startup Sologenic.

Litecoin tends to rise strongly before a halving because its users are mostly speculators, and that suddenly changed when LTC whales started selling after the halving.

Bitcoin sees “major rally” after halving due to “significant impact on supply and scarcity.”

“After all, a lot of Bitcoin is self-custody, so the availability of BTC on exchanges is proportionally small. So when a supply shock occurs, if demand stays the same or increases, the only option is to go crazy.”

It’s interesting to see the upside in the market’s reaction to the halving, correlation doesn’t necessarily imply causation, these milestones make no difference whether it’s Bitcoin or Litecoin.

However, wise investors will be wary of increased volatility as the halving event is not far away.

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According to Blockworks

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