In approximately 2 days, Litecoin (LTC), currently the 5th largest crypto asset by market cap (currently valued at US$6Bn. at US$ 96.82) undergoes “halving” – a built-in mechanism set to support LTC buying power.
What does LTC halving mean?
Well, first off, once the cut-off block is mined, the rewards for miners will be reduced from LTC 25 per block to LTC 12.5 per block. This will, logically, result in 2 scenarios:
- Crypto mining will seek higher rewarding mining chains (if they can), which will result in drop of hash rate;
- Since halving will as well mean that there will be fewer LTC mined, theoretically, LTC price should increase, which will support mining power necessary;
If we take a rough estimate of current 20% return on LTC mining, I would expect a 30-50% drop in mining power following halving. However, given higher hash capabilities, this drop should even out within of 30-60 days following halving (provided, of cause, overall crypto ecosystem is doing well – see my post on BTC dominance play).
Litecoin bull run resulted a 100% gain in the first quarter of 2019 rising above $145 in June. Recent correction to US$90 per LTC is reflecting expectation of future price corrections as we witnessed during the previous halving on Aug. 25, 2015, when LTC price reached a bottom of roughly US$ 2.7 BTC before breaking out above US$10 in April 2017.
In closing, my expectation is as following: LTC will experience a drop to US$60-77 level following halving. The only catalyst that might help in a swift recovery of LTC price or event prevent this dip would be an amazing BTC rally (to US$ 13-15K).