- Litecoin price is currently trading under the key support levels of 50,100 and 200-day EMA.
- Over 13.36 million LTC lost their profitability to the 12% crash of August 2 after LTC rewards were halved.
- Retail investors have once again become active, signaling volatility in the coming weeks which could prove to be helpful in achieving a 12% recovery.
Litecoin price is taking its sweet time in initiating a recovery rally following the crash of early August. Since the halving, the market sentiments have changed as investors fell deeper into losses. However, there is a chance for them to recuperate these losses provided LTC climbs back to the price it was at before the halving.
Litecoin price post-halving continues to hurt
Beyond the rewards being cut in half, the LTC halving event also hit the Litecoin price negatively owing to the broader market conditions. In the span of 48 hours on August 2, the altcoin fell by more than 12% from $92 to $82 and has since been moving sideways, making a very slow recovery.
LTC/USD 1-day chart
Trading at $82 at the time of writing, one of the biggest impacts on the network was taken by the 1.36 million investors that bought their 13.36 million LTC tokens at an average price of $89. The lowest band of this group was bought at $85, placing over $1 billion worth of LTC at a loss as the halving crash occurred.
Such an incident tends to impact the investors’ confidence, and that does seem to be the case as over the past week, activity has been relatively lower, but the investors stand a chance to recover their losses still.
A 12% rally would place Litecoin price back above $93, in effect turning the $1 billion worth of LTC profitable once again. And the chances of the same happening are also likely, as noted by the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD).
Furthermore, the helm of the activity currently is in the hands of retail investors, particularly those who hold less than $1 worth of LTC. These small traders are conducting the most activity on the chain right now, which opens Litecoin price up to significant volatility.
Litecoin transactions by size
This allows LTC to make quick moves, and if these moves end up following the indicators and trend upwards, Litecoin price would make back the losses it witnessed in no time.
Litecoin halving FAQs
Litecoin’s third block halving event is scheduled to take place at a block height of 2,520,000, which is estimated to happen around August 3. The current block height is 2,511,587. The first halving took place in 2015 after the block height was 840,000. The second Litecoin halving event occurred in 2019 when the total block height hit 1,680,000. This event takes place roughly once every four years.
Halving is an important event for both miners and investors. After halving, the block rewards are slashed in half, as the name suggests. The first halving event in 2015 reduced the block reward from 50 to 25 and the second one in 2019 halved it to 12.5. The third halving, which is scheduled on August 3, will further reduce it to 6.25. This means that miners will go from receiving 12.5 LTC for mining a block to 6.25 LTC after the third halving.
After a halving event, the emission of LTCs is cut in half, which effectively triggers a reduction in the Litecoin supply. If the demand remains more or less the same, it creates a negative supply shock. The same dynamics are seen if the demand for LTC increases. Due to the reduced supply and high demand, it would trigger a rally in Litecoin price. But traders often anticipate this trend and try to get an exposure to LTC before the halving, causing a premature rally and a sell-the-news drop on the day of the event.
Following a halving event, miners receive 50% fewer rewards for every block they mine and this creates scarcity in the altcoin, reducing the circulating supply of the asset. The event’s purpose is to control the inflation rate of Litecoin. Halving is therefore a key event that influences the asset’s price and market capitalization over time.
From a technical perspective, it is not any different. But from an investor and miner perspective, there are lot of differences. For example, the concept of halving remains the same for both assets, but due to relatively lower total supply of 21 million and first-mover advantage, Bitcoin’s network effect and large market capitalization as a result has a significant impact on the crypto ecosystem as compared to Litecoin. Additionally, the effect of halving events is more pronounced for Bitcoin, because of the asset’s dominance, hence BTC halving receives more attention.
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