2020 has been an exciting year for cryptocurrencies, and Litecoin was the coin that led the way towards a new bull run. However, after the pandemic-related market crash, LTC has been slow at recovering its lost value.
In this article, we look at LTC’s historical price action, review its recent performance, and provide a thorough Litecoin price prediction. Our analysis will go through several key points and events that will affect its price in the next few months. After reading this post you should have a good idea of what the future holds for LTC.
What is Litecoin (LTC)?
Litecoin is a fork of the Bitcoin network and was the first alternative cryptocurrency (altcoin) released to the public (as early as 2011). It was launched with the idea of becoming “the silver to Bitcoin’s gold”.
The goal of Litecoin is to address Bitcoin’s scalability issues and high transaction fees. It’s a “lightweight” version of BTC, designed to be faster and cheaper; hence the name “Lite” coin.
The popular cryptocurrency has many similarities with Bitcoin, as it’s built based on code of the former:
They both operate using a Proof-of-Work (PoW) consensus mechanism.
Both have a limited supply that gives the assets a scarcity aspect, similar to precious metals.
LTC and BTC mining rewards are halved every 4 years, further increasing their scarcity.
Difference between Bitcoin and Litecoin
Some of Litecoin’s unique characteristics include:
Adjusted transaction blocks - on the Litecoin network, each block is confirmed in just 2.5 minutes, compared to Bitcoin’s 10 minutes. This allows for faster transactions and lower fees.
Maximum Supply - Litecoin has four times as many coins as Bitcoin, a total of 84.000.000 coins, versus 21.000.000 coins for BTC.
Who created Litecoin?
Litecoin was designed by a former Google engineer, Charlie “Satoshi Lite” Lee. Lee got introduced to the crypto space by working as an engineering director at Coinbase in 2013. He successfully advocated the listing of Litecoin on the exchange from within the company, which played a major role in LTC’s success.
Lee is a controversial figure in the cryptocurrency space, known for selling off his Litecoin holdings at the peak of the 2017 crypto bubble. In a Reddit post, he published shortly after his sale, he explained that this was a necessary move to avoid any conflict of interest for Litecoin’s future.
Today, Lee is the Managing Director of the Litecoin Foundation, an organization dedicated to pushing Litecoin adoption, increasing its value proposition in the market, and establishing Litecoin growth.
Litecoin adoption and popularity
As one of the industry pioneers, Litecoin has managed to build a strong community over the years. One can say that it’s the only successful altcoin that remains in the market from the early days of the crypto markets.
While Litecoin may not be the most popular investment option today (due to the rise of DeFi projects) we still believe there are several reasons to be excited about its future. Among them are the continuous efforts to promote the cryptocurrency through sporting events.
For example, you might have noticed the Litecoin logo in the UFC octagon.
It is also the official cryptocurrency of NFL team Miami Dolphins, allowing fans to purchase merchandise and tickets with cryptocurrency.
Other crucial recent partnerships established by the Foundation include:
Cred - credit card bill payment processor.
BlockFi - cryptocurrency loans and interest-earning. One of the first crypto companies set to go public in 2021.
BitGo - the leader in institutional digital asset custody, trading, and finance.
Flexa - a payment processor with 39,000+ partners in its network.
As for merchant adoption, numbers are constantly increasing. When looking at Cryptwerk rankings, Litecoin is the 3rd most popular crypto to use for purchases after Bitcoin and Ethereum.
With a better understanding of the basics, let’s have a look at some historical price movements of LTC.
Litecoin price analysis
Markets are believed to work in cycles, hence it is important to base our analysis on past market movements. Below, is a chart showing important milestones in the past 3 years of LTC price evolution.
Litecoin, like most cryptocurrencies, entered an unsustainable price rally at the end of 2017.
In just a couple of months, its value increased by more than 900%, reaching an all-time high of $352. However, the bubble was short-lived.
The bear market that ensued was tough on LTC, as the coin lost 93% of its value over the course of 12 months. The coin bottomed out at $24 in 2018.
At the end of 2018, Litecoin started recovering. Its value peaked at $140 in early June of 2019 outperforming the relative price recovery of Bitcoin.
The new bullish conditions were short-lived as well. After reaching its local peak in 2019, the price of Litecoin started decreasing, following another wave of bearish market conditions.
2019-2020 The halving’s impact on LTC price
Similar to Bitcoin, Litecoin also experiences a halving of mining rewards every 4 years. The most recent halving (August 2019) didn’t have a noticeable impact on the coin’s price. The market continued a downward momentum due to the market conditions, and LTC followed suit, reaching a bottom of $40.
On that note, it might be important to mention that each reward halving is usually priced in about 6-12 months after the event. Therefore, when zooming out, we may see the halving effects play out on a long timeframe:
In December 2019, a new recovery phase started, and the price experienced considerable growth, preceding the bull-run that we are currently undergoing.
In just 60 days, LTC’s price more than doubled, peaking at +125% gains. It outperformed Bitcoin, which recovered 55% in the same period.
Unfortunately, the crypto markets took a quick turn to bearish market conditions when the COVID19 virus was officially declared a pandemic. Together with Litecoin, all investment markets experienced a large crash, an event later labeled as a “Black Swan”.
COVID19 crash to present day
During the market crash, Litecoin lost over 60% of its value in less than 4 weeks. Eventually, the coin bottomed out at $32. This was the lowest Litecoin reached value-wise and has since been recovering.
As we enter into a new bull run, we are experiencing price gains at a faster rate than before. The markets even experienced a short spike in August 2020 due to the rise of DeFi projects. During this short period of time, LTC reached a local peak of $68.
Since the coronavirus crash, Litecoin grew 160% in value over the course of 8 months and remains in a bullish trendline.
LTC price prediction EOY
With the end of the year approaching, we can give a short-term Litecoin forecast by analyzing the LTC chart and upcoming events.
With Bitcoin gaining more than 50% in the last month alone, market sentiment seems to be higher than usual. Euphoria is starting to become prevalent in the community, and transaction volumes have been steadily increasing.
The chart above shows how the number of LTC transactions spiked in August 2020 (DeFi boom). And while the peak didn’t last for long, the average number of transactions has doubled since before the event.
Going further into our sentiment analysis, it might be important to check some social stats (we use LunarCrush for this). A brief observation of relevant social platforms (Twitter, Reddit, Youtube, etc) reveals Litecoin’s current “hype” levels.
We notice a 75% increase in social engagement, which points towards positive market sentiment.
Additionally, a 28% increase in content contributions shows considerable community interest and growth.
That said, it’s the following news that seems to have boosted the entire cryptocurrency market the most.
Paypal Adds Litecoin
Arguably the biggest news in crypto of 2020 is Paypal’s addition of 4 major cryptocurrencies - Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. While this offer is limited to US citizens, it could open up to the rest of the world in the future.
The addition of Litecoin will increase its exposure, putting it directly in the hands of its 350 million customers. However, there is one major drawback. Users can only store the coins in their Paypal wallet, and are unable to use them as they please. In essence, Paypal wants to sell a representation of the actual coin, instead of the actual thing (“paper” cryptocurrency).
EOY technical analysis and price estimation
Generally speaking, Litecoin’s chart analysis is simple. Price action has been registering lower highs in the past couple of years and is at a crucial turning point, eyeing a big breakout.
If the price breaks the resistance zone around $60-68 towards the upside, there is a bullish trend confirmation for Litecoin. If this scenario occurs, we can expect the price to reach at least $80 by the end of 2020.
However, if the price breaks downwards instead, we could very well see a retracement towards the $50 mark. It could mean another lower high, and another bearish cycle for Litecoin.
That being said, when making a Litecoin price prediction it is important to keep Bitcoin in mind as well. Litecoin price action is heavily linked to that of Bitcoin and if the leading cryptocurrency continues its price rally, there’s a big change LTC will follow suit.