Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
Litecoin [LTC] Bulls and Bears continued to battle for supremacy on the price charts. The price remained stagnant around the $65 level this week.
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Glass half full
On August 2, the third edition of Litecoin’s halving took place when the network reached a block height of 2,520,000, causing miner rewards to drop from 12.5 LTC to 6.25 LTC.
Litecoin has successfully halved its block reward!
⚡ $LTC ⚡ pic.twitter.com/iemCnkPsdu
— Litecoin (@litecoin) August 2, 2023
Halving is a major event programmed into certain cryptocurrency protocols, including Litecoin, that occurs at regular intervals. During this event, the block reward given to miners for validating transactions and securing the network will be reduced by half.
The primary purpose of halving is to control the issuance rate of new coins and control inflation within the cryptocurrency system.
The impact of halving is twofold. First, it introduces an element of scarcity into the cryptocurrency ecosystem. With the reduced block rewards, the rate at which new coins are put into circulation decreases.
This creates a sense of scarcity among market participants, potentially leading to an increase in demand for cryptocurrency.
Secondly, halving affects mining rewards for miners. As block rewards are halved, miners receive fewer coins for their mining efforts. This can result in reduced mining profitability, especially for miners with higher operating costs.
Some miners may be forced to leave the network if the costs of mining exceed the revenues, potentially leading to a temporary drop in the network’s hash rate and overall security.
Litecoin, as it completes its third halving since its inception in 2011, will experience a reduction in its supply. It will result in less new LTC being mined. This scarcity factor could lead to increased demand and speculative activity in the cryptocurrency market.
Additionally, miners will have to adapt to reduced mining rewards, which could impact their profitability and mining operations.
ChatGPT makes a comparison
Experts expected that the halving could help Litecoin gain more market share in the PoW sector. To make a comparison, I consulted ChatGPT to highlight the various differences between multiple PoW cryptocurrencies and their various benefits.
According to the AI bot, Litecoin’s emphasis on faster transactions and lower fees is likely to attract more users and investors. As transaction volumes increase, network activity for Litecoin could increase, broadening its appeal as a fast and cost-effective digital currency.
However, Dogecoin’s inflationary nature contrasts with Litecoin’s scarcity as a result of the halving. While Dogecoin has strong community and viral appeal, concerns about dilution due to inflationary supply could put Litecoin at an advantage in the short term.
Meanwhile, users who value privacy and anonymity will be more likely to stick with Monero [XMR] due to its unique privacy features. However, for those who prioritize speed and lower costs, Litecoin could serve as a practical alternative.
As for Ethereum Classic [ETC]the focus on immutability and code-as-law principles could attract a different audience compared to Litecoin’s user base. The short-term upside for each cryptocurrency would depend on specific usage scenarios and the preferences of users and investors during this period.
Source: ChatGPT
Does Litecoin have a competitive advantage?
Recent regulatory scrutiny of various cryptocurrencies has negatively impacted several altcoins. However, Litecoin was one of the few altcoins that was considered a commodity in the lawsuit against Binance [BNB].
On March 27, 2023, the US Commodity Futures Trading Commission stated this $LTC is a ‘true’.
— Litecoin (@litecoin) July 21, 2023
After seeking ChatGPT’s opinion on this development, it stated that the classification of Litecoin as a commodity by the CFTC is a “golden ticket” for crypto. As a regulated product, Litecoin could potentially attract more institutional interest and investment. It could potentially lead to greater adoption and a positive effect on price.
Source: ChatGPT
Price tells a different story
At the time of writing, LTC was trading at $66.06.
Read Litecoins [LTC] Price forecast 2023-2024
Both LTC’s Relative Strength Index (RSI) and Money Flow Index (MFI) remained below the neutral line of 50. But it is On Balance Volume (OBV) did not show a positive sign.
Source: LTC/USD, TradingView
In conclusion, Litecoin’s on-chain metrics suggest that a potentially bearish price move is underway.
