Bitcoin did a sudden jolt and rocketed upwards, reaching $5k+ before settling a bit to the current $5,026. That is a proud 24% gain in one week, a nice reminder of the unpredictability of bitcoin and the whole digital assets market.
However, one top 10 coin has been on bitcoin trails and even outpacing it substantially and that is bitcoin’s copycat and expensive testnet – Litecoin. LTC gained 41% in one week, adding to the already remarkable increase of 170% in the last 3 months. Litecoin’s price is rising, as is it’s hash rate. The hash rate recently recorded is 321.35 TH/s, which is very close to the all-time high of 342.88 TH/s recorded in May 2018.
More miners implies that Litecoin mining is now profitable. With the increase in the network’s hash rate, there’s an increase in the networks overall security as well, thus making the network more lucrative to investors
So, is there a particular reason for Litecoin’s rally or was this just the usual speculation and manipulation orchestrated by whales and other big guns in the market?
We are not the only ones wondering, as Mike Novogratz, billionaire investor and known bitcoin advocate took to Twitter to express his confusion with the market as well:
Most quoted reason for the surge is approaching halvening of litecoin miners’ reward. This is almost the same move that LTC made in may 2015 before the last halvening. History repeating, in 2015 we saw a 67% move to the upside , then another 200% from there.
Litecoin mining difficulty is evaluated and adjusted once every 1018 blocks (a bit less than 2 days) in response to increases or decreases in total network hashrate. The reason for this is to maintain a target block generation time of 1 block every 2.5 minutes. As miners join or leave the network the hashrate changes. If hashrate increases blocks will be generated too quickly therefore difficulty will increase. If hashrate decreases blocks will be generated too slowly and so difficulty will decrease. This difficulty adjustment is the mechansim that keeps the network running at 1 block every 2.5 minutes. At this rate it takes about 4 years to mine 840,000 blocks.
Every 840,000 blocks the mining block reward halves. Today miners receive 25 litecoins per block mined. When the next halving occurs (Estimated August 6, 2019) the block reward will be 12.5 litecoins rewarded per block to miners. Then, after the next 840,000 blocks it will be halved again to 6.25 litecoins per block, and so on until all 84,000,000 litecoins have been mined. It will be more than 100 years before the last litecoin is mined.
The decreasing rate of issuance creates a decreasing supply. As supply decreases and demand increases, the value of each litecoin will go up.
Co-founder of Morgan Creek Digital, Jason A.Williams, recently shared a post on Twitter which predicts that Litecoin’s price could rise to $650 by May 2019.
Implementing privacy tech into the protocol
Another reason cited as the ignition of Litecoin’s rocket is their intention to implement privacy technology called mimblewimble into Litecoin protocol.
Litecoin Foundation has approached Beam for plausible agreement to perform Mimblewimble via Extension Blocks on Litecoin. According to the official Blog of Beam, teams behind Litecoin (LTC) and new privacy coin Beam have commenced research towards combining privacy and fungibility to Litecoin by providing an on-chain change of general LTC into a Mimblewimble alternative of LTC and vice versa. Upon such conversion, it will be reasonable to conclude with Mimblewimble LTC in total confidentiality.
Litecoin founder Charlie Lee has lately said that he is examining methods of developing Litecoin’s fungibility by adding Confidential Transactions. In the month of January 2019, Lee had said that fungibility is the only part of undecayed money that is missing from Bitcoin & Litecoin. Now that the scaling discussion is behind us, the ensuing battleground will be on fungibility and secrecy.
Plain old speculation
Most probable reason for the pump is good ol’ speculation – the main driving force of prices of majority of cryptocurrencies is back at work, after a prolong hiatus of almost 14 months. There are so many big and smaller (but well organized and conspiring) whales that arrange and execute pumps and dumps on the “normies” and it is very possible they simply decided it is time for some Litecoin pumping as the coin still has some reputation and perceived value in the eyes of crypto enthusiasts and investors.
Right now it is probably time for cooling off, so if you rode this bad boy to these heights, it might be a good idea to take some profits. If you were on the sidelines pondering to enter, now is likely too late – wait for a retrace and better entering position.