If we take a look at the situation of cryptocurrency market over last 24 hrs, we find that the picture has not been a pleasant one. Almost all major cryptocurrencies are down, and Bitcoin is trading at a little over $11,200. However, one of the top 5 cryptos is an exception to this scenario. Litecoin – the 4th largest cryptocurrency by market cap – is trading high despite all of its other peers going downwards. At the time of writing this article, it’s priced at $123, which represents a 5% gain from the price of previous day. And the reason behind this rise is rooted into fundamentals, as you’ll learn in the next few minutes.
In about a month from now, Litecoin will have its next block reward halving event. Scheduled for 6th of August, the event will halve the reward of mining LTC, thus making the supply of this cryptocurrency even more scarce. Today’s surge in CMP of Litecoin is being attributed to this particular reason. Currently, miners receive 25 LTC for mining Litecoin, but after August they’ll receive only $12.5. Due to this reason fewer coins will be added to the network, thus pushing the price higher. And in anticipation of that, the demand has increased already, starting the uptick much before this scheduled block reward halving event.
After reading all of this you may certainly be thinking that Litecoin is going to only rise and rise in the coming days. But before you take any trades based on this assumption, let me tell you that this is not the case. If crypto markets were so simple they would not have been as volatile as they’re. A large number of factors contribute to the surge or decline in the prices of any crypto, and those factors will also play a role in the case of Litecoin to decide its direction in the near future. And currently, some of those factors are not looking very promising. For example:
- Litecoin has already surged as much as 300% on a year-till-date basis in 2019. When any cryptocurrency surges this much, the upper ceiling starts coming closer and closer.
- Litecoin’s hash rate – which is the computing power dedicated to mining – has also shot to a record high of 468.1019 TH/s this week. There’s a rise of 220 percent in this metric too since the month of December.
Therefore, it doesn’t seem that Litecoin will go only up and up in the coming days. Instead, we think that a sharp pullback is around the corner. Of course, the price will start going up once again after this block halving event, but before that a correction looks imminent.