Can Litecoin (LTC) Still Rally Against Bitcoin (BTC)?
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Litecoin (LTC) is one of the very active altcoins, used both for trading and for moving funds between exchanges. LTC is highly liquid and attractive, but over the years, the asset has seen significant criticism about its lack of development.
LTC, which traded close to $200 in the past few weeks, is still lagging in its valuation against Bitcoin (BTC). The coin has never revisited its previous peaks, especially the one in 2014, where LTC traded for 0.05 BTC.
In 2021, there are some hopes and hints the stagnant price position may change, but LTC is yet to prove its mettle in the LTC/BTC pair.
There are hints and clues that the LTC rise against BTC may not be organic, but instead an effort to boost the coin’s position. Since the 2017 boom, LTC has not managed to make serious gains against BTC, raising questions on whether its past performance was artificially boosted by bot trading.
During the current bull run, unlike in 2017, LTC is in fact going through a slow slide in BTC terms, slipping toward 0.003 BTC. As of 2021, only about 18% of LTC trades are in the BTC pair, as instead the asset is more active against USDT and other dollar-pegged crypto coins.
Did LTC See Deliberate Wash Trading?
LTC was one of the first asset to be added to Coinbase, while there was still a scarcity of altcoins. One of the reasons for this decision was that Charlie Lee, the coin’s founder and lead developer, was involved in adding LTC markets on Coinbase.
The easy availability of LTC boosted its market price, sending it from lows under $1 to a peak above $360. But during the price spike, there were some doubts the gains may have been achieved in a dishonest way.
Recent evidence shows LTC has experienced so-called wash trading, having its price artificially inflated through concerted efforts. Bitfinex, one of the early crypto markets, allowed for anonymous trading, further boosting the Coinbase price.
The events surrounding LTC wash trading came to light during the due diligence process for a Coinbase public listing. The US Commodities Futures Trading Commission discovered that Coinbase was aware of concerted order-placing, which distorted the perception of real demand for LTC and other assets, as well as their real trading potential.
At this point, the news have not affected the LTC market price, but they raised questions on the validity of crypto price discovery. In 2017, bot trading was more capable of swinging an otherwise illiquid market.
Who Was Employee A?
The due diligence of Coinbase discovered that Employee A had been engaged in wash trading for the LTC/BTC pair. The company was fined $6.5M and received a cease and desist order, without reference to the specific employee.
But online media were suspicious, because in 2017, Lee still worked as part of the engineering team of Coinbase. There is no certainty in identifying the employee, as the chief concern of regulators was with the potential for misleading trades and bot orders that swayed crypto prices.
At one point, Lee was among the most influential social media personas in crypto. But in early 2018, it became known he sold all his LTC, during peak market conditions. Lee also warned the high peak above $300 did not exclude another price slide, and LTC subsequently went on to crash to $22 again during the lows of the bear market in 2018 and 2019.
LTC Still Bullish for USD Price
LTC is still bullish, due to its wide distribution in the crypto ecosystem. Buyers can now access the coin from PayPal, as well as most brokerages and financial apps. At this point, LTC may be positioned for more growth as a speculative asset.
LTC is also getting a boost from its potential for breakout prices, beyond its previous price peak.
At the same time, there are skeptics that see LTC as a zombie coin that is best avoided, due to its sluggish price action until recently. In the past, LTC has been known for its sharp price spikes, followed by deep crashes. During the current bull run, LTC has two possible scenarios – to break out with other altcoins, or to continue adding only modest gains.
LTC Becomes Privacy Coin
The Litecoin project had a single hope for future development, namely to complete the MimbleWimble privacy protocol. After some delays, the developers on the Litecoin team announced the MimbleWimble implementation had its code completed as of March 16.
However, the actual code release to Litecoin nodes may take weeks or even months. For now, the MimbleWimble code has been running on a testnet since September 2020. But there is no clear date on when Litecoin will become a coin with privacy transaction potential.
Privacy coins have been greeted as a truly censorship-resistant mechanism for crypto payments. However, exchanges have been wary of allowing anonymous inflows of funds, and require even privacy coins to be verified and connected to a known user identity.
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