The second Litecoin halving is coming next week — it will take place approximately on the 6th of August 2019. It is obvious, that reward decreasing will affect the blockchain, miners and other participants, and of course LTC price. Experts are arguing what will come after the two times block reward cut.
Litecoin halving drags a lot of attention due to LTC popularity itself and because it is considered as a repetition of future Bitcoin halving, that comes in May 2020. Many people believe, we can expect a similar scenario.
In this article, we gathered all the information about LTC halving, summed up experts opinions and made LTC price analysis. We believe it will help you to observe the whole picture and get prepared for Litecoin Halving event.
How Litecoin Reward Is Halved
Halving is a rule embedded in every blockchain net. It says that a reward for block processing is decreased by half after a certain amount of blocks. The main point is to ensure the fair distribution of the reward among the net’s participants.
Litecoin’s network halves its reward every 840,000 blocks. After the coin’s release in 2011, there was only one halving so far — on the 26th of August 2015. So, the LTC halving takes approximately 4 years at the current net capacity. On August 6th the reward for one block will change from 25 LTC to 12.5 LTC.
This event will definitely affect the Litecoin’s position. There are two possible scenarios and we will uncover about both of them. But first, let’s take a look at the previous halving and its repercussion.
The First Halving
As we mentioned, the first time when the LTC blockchain halved was on August the 26th 2015. At that point, a reward decreased from 50 LTC to 25 LTC. There were several remarkable points in the market’s reaction.
The first one was the rise before the halving and short-term following perspective. The rate had been in a long sideway for some time at that moment and started to grow at the end of May. The price was rising from $1.5 to $8.48 until the middle of July. Bears started to drop the price — during the period between the 10th and the 16th of July, it decreased from the peak of $8.48 to the lowest point of 3.38$. After that LTC took the sideway and was traded at similar rates.
The second part is the long-term perspective. If we look at the long-period graph, it is obvious that the rate was slowly but confidently growing. The low price which was the result of the nosedive first days after the halving attracted traders. They provided the power to gain the currency. By the end of 2016, the price recovered from $2.64 to $4.6. Along with that, the market volume went almost two times bigger: from $117 million to $226 million.
Despite a popular opinion that a coin loses attractiveness after reward halving, we can conclude that it’s far from the real picture. We can see that the first halving didn’t kill Litecoin but even made it stronger in the first 18 months.
What to Expect This Time
It is a tough question of what to expect from the second halving. Many things changed on the crypto market for the last 4 years, but predictions still could be made. There are two possible scenarios of consequences.
The Drop Scenario
The emission of a currency always affects the price. It is a classic example of how the excess supply can lower the rate of the asset.
It is a popular opinion that the coin becomes less attractive to mine and invest in after the reward halving. Many traders may start bearish trading and sell all their Litecoin. This will provide too much supply with small demand. As a result, the rate will significantly drop down — at least, in the short-term perspective.
We have seen a similar pattern during the first LTC halving in 2015. The price took a nosedive, lost half of the value in several days and needed some time to recover.
The Rise Scenario
On the other hand, everything can go completely different. The rate can go up sky high for several reasons.
Traders can take the previous halving events in the count. They will buy as much as can, causing a massive bull run. At some point, traders will sell and gain significant profit. This process may start some time before the halving day. In fact, the last 7 days resulted in mild growth, that could be considered as a sign.
In addition, miners will very likely try to pump the LTC price. If the reward becomes two times smaller, the only way to keep the level earnings is to make the price higher. Miners could start buying and hodling LTC, in order to keep it high.
Experts are keeping on arguing on LTC halving consequences. For a starter, the Litecoin founder Charlie Lee claimed that the halving will be shocking for miners and investors so they need to prepare for the future volatility.
Along with that, a popular crypto portal and Twitter blog Zerohedge was modest with words but made a bold prediction.
Another influencer and investor CryptosBatman said that the upcoming halving will probably repeat the pattern of the first one.
Some people e.g. NebraskanGooner admit the trend of dropping but still say that it may be an opportunity to invest.
No one can tell for sure what will happen with Litecoin after the halving. It will definitely affect the network, its participants, their revenue and, consequently, the price of LTC. We will update you with LTC price analysis in the mid of August. We really hope, LTC halving will give us a better understanding of what is going to happen during Bitcoin halving the next year.
ChangeHero is always happy to provide you with LTC purchasing and instant exchange option with more than 140 currencies, best on Fixed and Float rates. Visit our platform to buy LTC with a credit card and exchange it fast, secure and without any limits.
We are always happy to see you at ChangeHero!