Litecoin (LTC) Suggests Chance of New Rally
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Litecoin (LTC) sank by 75% during the market shakedown in June, abandoning its record above $400. The asset sank close to $100, but once again showed signs of recovery. Buying LTC may become attractive again, as altcoins move in for another round of gains.
LTC started a recovery after a weekend depression, rising to the $140 level on Tuesday. LTC trading volumes remain on the low side at $2B per 24 hours.
What Could Boost LTC Adoption
One of the bullish signs for LTC is that Grayscale Capital is expanding its holdings, adding above 33,000 new coins to its vaults. The renewed buying is showing some interest in the asset.
LTC remains attractive for being a highly liquid large cap digital coin with a long history of trading. This asset has the advantage of being distributed to almost all exchanges, with no one pairing to dominate the market. LTC thus has a wider base for adoption and price discovery and may be less volatile compared to newer coins and tokens.
Buying LTC for fiat is accessible from most exchanges, and in most regions. LTC is distributed to multiple addresses, though there is a concentration of coins in the top three and top 100 addresses.
Can LTC Go for Another Rally
LTC has a history of rapid rallying, followed by a significant price drop. However, those price moves happened during years of much lower digital asset adoption and lower trading liquidity.
LTC market prices are just breaking out from the lows, but there are already on-chain signs of the asset activating. Recent transaction data show Litecoin’s on-chain activity briefly outpaced Bitcoin transfers.
One of the reasons for the slowdown in BTC transfers is the recent drop in mining activity, which is putting a strain on block production and making transactions slower and more expensive. For now, the Litecoin network allows lower fees and a faster block time.
For most large cap assets, on-chain transfers usually coincide with periods of active trading. LTC has been viewed as a laggard that has not lived up to its potential, and may seek higher valuations.
The price moves of LTC sill depend on the overall market recovery. Some expectations view LTC as entering another price spike that will offset the recent dip.
LTC is compared to Ethereum Classic (ETC), which faced unprecedented interest due to its connection to ETH. LTC may also be viewed as the cheaper alternative to BTC.
Litecoin Expects Confidentiality Upgrade
One of the chief criticisms for Litecoin’s network is that it has not seen significant development in years. However, the past couple of years created the code for confidential LTC transactions using the MimbleWimble technology.
The code for MimbleWimble was completed in March 2021, though the actual launch and the potential for veiled transactions has no specific deadline.
The actual launch may serve as an additional boost of attention for LTC.
General search interest in “Litecoin” has grown in 2021, as new crypto buyers are looking for growth potential.
How to Get LTC in 2021
Buying LTC in 2021 is highly accessible. It is possible to buy LTC with a credit card through the Binance exchange, though still limited based on the underlying currency. LTC can also easily be acquired through another digital asset.
LTC can also be bought through Coinbase, the Kraken exchange, and is an option to acquire in multiple fintech apps, including PayPal.
What are the Weaknesses of LTC
Despite its relative popularity, LTC is still showing some weaknesses that may add to the risk. The Litecoin project has managed to build its own Lightning Network, using a similar technology to the Bitcoin Lightning Network.
However, the capacity for LN transfers is small, as nodes only carry less than 163 LTC in total, the equivalent of about $22,000. The impact of the LN on Litecoin is thus negligible, though having a LN running was viewed as an important technological milestone for LTC.
The other short-term weakness for LTC is its blockchain security. The Litecoin network hashrate has dropped precipitously, coinciding with the slide in Bitcoin mining. This suggests that some of the BTC mining farms that closed were also responsible for mining LTC, as well as DOGE as a side coin generated in each LTC block.
For now, the Litecoin network is not threatened by attack, as its hashrate is still too high for any one entity to attempt double-spending. However, a robust interest from miners may be an indicator the coin has some long-term appeal. Currently, LTC mining is relatively profitable for miners that acquired their rigs in the past. Yet one would need about 10 L3 specialized machines for the chance to mine 1 LTC per week.
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