Litecoin’s halving is expected in less than two weeks, and as is often the case with such events, investors are expecting some positive price action. On-chain metrics are showing that $59 million in LTC has been bought in just the past 48 hours.
However, many suggest that Whales are at the heart of this buying spree, but that depends on your definition of what a Whale is, as some of the largest LTC addresses have hardly moved ahead of this event.
Litecoin is one of the most prominent Bitcoin forks, and one of the first successful altcoins that hit the market, having been created in 2011.
Like Bitcoin, Litecoin undergoes a halving every four years, with the next one scheduled for August 4.
The current Litecoin block reward is 12.5 LTC; however, after the halving event, the block reward will be 6.25 LTC.
This diminishing supply emission usually causes investors to pay close attention to a coin, and leads to buying as the price needs to find an equilibrium between the production (mining) cost after the event.
Many are speculating on a price surge as this mechanism has proved to be a catalyst for a rally in the past. The buying appears to have already started, as Ali, on Twitter, points out.
Even though the current circulating headlines suggest that LTC whales are buying, that might not be the case, depending on how you classify Whales.
In the chart below, the supply distribution charts show the top 100 addresses have been calm since the start of July.
There is a more significant spike in the top 100 addresses accumulation from June 11, when it was sitting at 31.65M coins, compared to July 2, when it rose to 32.39M coins and is currently sitting. Even though this was a significant spike, compared to the metric history, it is still a lower high measured from its peak in April when it reached 32.62M on the 25 of that month.
More significant supply increases occurred in the cohorts of 10,000 LTC units per address and more.
The 10K units cohort continued accumulating in the previous couple of days following the price decrease. For clarification, this metric means addresses holding more than 10K Litecoin in their wallets are accumulating. This is still a significant number of around $93,000+.
The previous Litecoin halving was on August 5, 2019. To assume what is likely going to occur around the currently expected one, it is worth looking at some key metrics from the previous one event.
Contextually speaking, the Litecoin halving of 2019 occurred in the midst of a multi-year bear market. After reaching an all-time high (ATH) of around $420 on December 13, 2017, the price of Litecoin decreased to $22 exactly a year after (December 14, 2018), driving it back to pre-bull market values.
Since then, a steady price increase has been seen until June 24, 2019, when it peaked at $145. With this in mind, it is worth asking – Did the halving anticipation drive this price appreciation? Worth noting is that from its June’s peak, the price proceeded to depreciate for 265 days, well past the halving when it was $106 and falling back down to $25.8 on May 13, 2020.
The price of Litecoin started consolidating once the Bitcoin halving anticipation began and really took off after May 11, 2020, when it ended.
Contrast the on-chain metrics of supply distribution with the same ones from the previous halving, and there are some notable differences.
The supply in the top 100 addresses has been increasing from the December 2018 low and has established a sustainable uptrend even after the price decrease that occurred following the halving of 2019.
At its peak in June 2019, the number of LTC held in these addresses came back to 26,79M LTC, which is similar to what it was around the ATH (28M LTC), and ultimately surpassing it.
On the other hand, the cohort of 10K and above didn’t show significant growth in 2019 and beyond.
It made a sustainable uptrend, but by looking at the chart, we can clearly see that the halving proximity hasn’t impacted their behavior.
The cohort that showed the most drastic accumulation activity was definitely the 100k units and more.
These addresses started accumulating in July 2018, but the activity really picked up from November the same year.
The price of Litecoin looks to be in a similar spot contextually to where it was in the previous halving. On May 10, 2021, it reached $412, which peaked in the last bull cycle. From there, it started its bear cycle and fell to $41 on June 18, 2022, which was 398 days.
An uptrend started following that, leading the price above the significant horizontal support zone. However, the price increase we have seen didn’t develop impulsively, usually seen as the start of a bull cycle. Instead, we have seen a triangle forming from February 8 this year, which slowed down the momentum behind the increase.
From June 18, when this increase started, it looks like another corrective wave ABC to the upside developing. If this is true, then it is still part of the bear cycle as its second wave X, which means that another move to the downside for the wave Z should develop.
Its target could be back at the support zone between $41-70, but it could very well break the support zone below.
There could be a possibility that the increase from June 18 last year was the start of a bull cycle, but a bull market, which is usually led by Bitcoin halving – still far off. The price of Litecoins will likely experience the same fate as in the previous halving – a slow deterioration in price until Bitcoin starts picking up steam in April next year.
Current on-chain metrics also don’t support the Whale accumulation claim, and instead, it appears that smaller holder cohorts are playing into the hype.
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.