Can Litecoin (LTC) be a Strategic Tool for Bitcoin Accumulation? A Crypto Investor’s Guide

Key Takeaways

• A strategic Litecoin hold might offer a way to accumulate one whole Bitcoin in the future at a fraction of the cost.
• BTC-to-LTC ratio compression is currently 944:1 which has created huge profit opportunities as Litecoin is expected to catch up in value to Bitcoin.
• Key selling intervals include 200:1, 100:1, and 50:1. Setting sell orders at these ratios helps lock in profits as Litecoin appreciates against Bitcoin. 
• A Litecoin ETF would significantly boost the narrative that digital silver will be filled by Litecoin once demand and price increase, driving the BTC-to-LTC ratio compression.

Litecoin was created in 2011 as digital silver known among cypherpunks as the ‘silver’ to Bitcoin’s ‘gold.’ While Bitcoin is viewed as a store of value, Litecoin is a lighter Bitcoin offering a faster and lower-cost payment network and doubling as a store of value, at the same time. 

With features like privacy options and merge mining with Dogecoin, Litecoin offers outside synergy opportunities with large proof-of-work blockchains like Dogecoin, an inflationary cryptocurrency endorsed by Elon Musk. Since 2019, Litecoin has understandably faded from the spotlight reflected by the current 944:1 BTC-to-LTC ratio. This article looks to build a case where individuals have a unique trading opportunity to earn Bitcoin by simply purchasing Litecoin. 

In other words, a purchase of 100 LTC may appreciate to 1 whole Bitcoin. No one is talking about this high-reward strategy! Let’s find out why it is interesting and how to take advantage of Litecoin’s growth potential for Bitcoin accumulation.

Crypto Cypherpunk: The History of Litecoin (LTC) Price Since 2011

In the chart below, between October 2011 to February 2013, Litecoin’s  price was quiet for approximately 17 months ranging between $0.02 and $0.10. In March 2013, the price broke out to $0.86, and by April 2013, it was at $4.30. That same year LTC reached $40 and in 2017 went on to reach highs of $413.

During the early days between 2011 and 2013, Bitcoin was trading at around $3 and, by early 2013, had reached $20, which set the stage for Bitcoins big rally later that year. At the same time, Bitcoin (BTC) (BTC) was making headlines, jumping from $20 to around $266 by April 2013, this attention as digital gold gave Litecoin the spotlight to advocate itself as digital silver. 

In 2013, the BTC-to-LTC ratio was around 60:1, meaning 60 LTC bought 1 BTC. Today, that ratio has dropped to 944 LTC required to purchase 1 BTC in September 2024.

This current ratio highlights one of two things. Either Litecoin is not digital silver and is trending to zero versus Bitcoin, or the market has not yet chosen a digital silver, and once it does, the ratio will compress back to 100:1.

If Litecoin really is digital silver, then holding silver at these lows presents an opportunity to sell LTC in the future for much more BTC. Digital silver is expected to be needed for digital gold to thrive.

Target for Litecoin in the Coming Cycle

Given these parallels, Litecoin could aim for a BTC-to-LTC ratio of 100:1 to 50:1, much like a gold-to-silver ratio in balanced markets. This would place Litecoin’s price at roughly 2-3% of Bitcoin’s value, suggesting a potential target of $1,000–$1,500 in a strong bull cycle. Having said this, the only real way to measure this trade is to use Litecoin versus Bitcoin and not to measure Litecoin in usd.

LTC/BTC Trade Example

If somebody purchases 0.01 BTC worth of Litecoin today at a current LTC/BTC ratio of 0.001, and the LTC/BTC ratio rises to: 

• 80:1 Ratio: 0.0125, your Litecoin would now be worth 0.125 BTC. 
• 45:1 Ratio: 0.022, your Litecoin would now be worth 0.22 BTC.

For this to happen, Litecoin would need to be in the public eye with likely speculation that a Litecoin ETF will be applied and granted by the Securities and Exchange Committee . It would also mean that the BTC-to-LTC valuation would need to trend toward 100:1.

Understanding a Potential Trade Opportunity in Bitcoin-to-Litecoin Ratio

Like silver in traditional markets, Litecoin can outperform Bitcoin at specific points, making it a solid altcoin to hold during an altcoin bull market. 

This strategy allows traders to place a sell order on an exchange selling LTC for BTC when the LTC comes closer to a 100:1 BTC-to-LTC ratio which would start to reflect a balance between digital gold and digital silver. In this way, a trader can speculate on a position in LTC in September 2024 with the aim to offload that LTC for more Bitcoin once the ratio between the two commodities compress over this next bull market. An example of how this might play out can be seen in the chart illustrated below.

What is the Average BTC-to-LTC Ratio?

An increase in the LTC/BTC ratio would signal that Litecoin is appreciating faster in USD than Bitcoin. This becomes logical beause Litecoin is at its lowest value compared to Bitcoin in its history, which is why investors are being presented with this high-risk, high-reward trading opportunity. The BTC-to-LTC ratio changes daily, however, the table below lists levels reached since 2011:

The average BTC-to-LTC ratio based on the given figures is approximately 187:1. At the current rate of 0.001035 BTC per Litecoin, 50 Litecoin is worth about 0.05 Bitcoin today. In contrast, if the LTC-to-BTC begins to trend back to a fair 100:1 ratio, then it will probably find resistance at the 200:1 ratio, where it has ranged for a long time in the past and also meets the average. 

It will also take some time for the market to choose digital silver; however, climbing back to a resistance level of 200:1 would mean the same 50 Litecoin purchased for 0.05 BTC would equal 0.25 Bitcoin since it takes 200 Litecoin to buy 1 Bitcoin at that ratio.

Backchecking a Litecoin Strategy: Why Use Silver for Gold Accumulation?

To fully grasp the Litecoin trade opportunity, it’s helpful to examine silver’s historical performance. For thousands of years, silver has been a reliable store of value and a hedge against economic uncertainty. While it plays a similar role to gold in financial markets, silver is generally more accessible due to its lower price point.

Much like Bitcoin, silver is considered a hedge against inflation. It is a tangible asset with intrinsic value in global markets due to its dual properties as a reliable store of value and antimicrobial properties.

Key Benefits of Silver Investment

• Hedge against inflation: Silver has historically protected against the erosion of currency value.
• Tangible asset: Unlike digital assets, silver’s physical nature provides inherent value.
• Market liquidity: Silver is highly liquid, making it easy to convert into cash or other assets.

Case Study: How the Hunt Brothers Capitalized on Silver’s Undervaluation in the 1970s to Earn More Gold

In the late 1970s, the Hunt brothers capitalized on the gold-to-silver ratio , which was around 80:1, and by hoarding silver, they helped drive the ratio down to about 17:1. This massive compression in the ratio allowed them to increase wealth by converting silver holdings into gold at a much more favorable rate.

This strategy allowed the Hunt brothers to monetize more gold by selling silver when the gold-to-silver ratio compressed. Litecoin, or digital silver, offers a similar potential with much larger gains because the current BTC-to-Silver ratio is almost at 1000:1.

What is Required for BTC-to-LTC Ratio to Compress?

Several factors could potentially compress the LTC/BTC ratio and close the price gap between Litecoin and Bitcoin. Here are the most important ones:

Increased Interest from Institutional Investors and OG Bitcoiners

If institutional investors and seasoned Bitcoiners recognize the need of “digital silver” to complement “digital gold,” this will boost demand for Litecoin and raise its value relative to Bitcoin. This shift may be triggered by a Litecoin ETF

As rumors begin circulating that institutional interest in Litecoin is real attention, claims that its functional similarities to Bitcoin might make it more likely to be approved in the future. 

Increased Use for Payments in Litecoin and Dogecoin

Suppose Litecoin and Dogecoins position themselves as a fast, low-cost payment solution and gain traction in the financial ecosystem, particularly with online merchants and payment processors. In that case, this increase in demand may drive demand upward for Litecoin. 

As Bitcoin solidifies itself as “digital gold” and is used primarily for storing value, Litecoin could shine as a currency for everyday transactions, creating a niche in payments bonded to Dogecoin.

Market Rotation to Altcoins (Altseason)

Historically, when Bitcoin rallies significantly, investors often rotate profits into altcoins, leading to an altcoin season. If market sentiment shifts toward altcoins that offer a store of value and a payment network, then the market will place the spotlight on Litecoin. 

Increased Litecoin Adoption Through Partnerships and Credible Endorsements

Litecoin’s partnership with PayPal in 2020 for crypto payments was one example that helped the currency gain more attention.

Michael Saylor has suggested that, out of the thousands of cryptocurrencies, only a few, perhaps a dozen,  might eventually be recognized as digital commodities by regulatory bodies like the SEC. He believes that Litecoin could be one of those few, due to its decentralized nature and similarity to Bitcoin. 

Bitcoin’s Network Congestion

If Bitcoin’s network experiences increased congestion and higher transaction fees, more users may turn to Litecoin as a cheaper, faster alternative for transactions. This could boost Litecoin’s adoption and demand, narrowing the gap in the BTC-to-LTC ratio.

Revived Marketing and Community Efforts

A strong community and consistent marketing efforts can generate more awareness and interest in Litecoin. The Litecoin Foundation and its supporters could actively promote Litecoin’s unique features and use cases, helping attract new investors and users.

Thinking in Ratios: A Strategic Approach to Litecoin (LTC) and Bitcoin (BTC)

Key Buying and Selling Intervals in the BTC-to-LTC Ratio

• 944:1 – Hold Litecoin in September 2024 and exchange USD for LTC at this ratio.
• 200:1 – Sell 50% of your Litecoin for Bitcoin.
• 100:1 – Sell 50% of your remaining Litecoin for Bitcoin.
• 60:1-20:1 – Sell 100% of your remaining Litecoin for Bitcoin.

This approach allows for gradual profit-taking as Litecoin’s value rises relative to Bitcoin. By doing this, the trader can take advantage of the tightening of the BTC-to-LTC ratio and avoid the risks of holding through extreme price swings. 

Step-by-Step Guide to Using Litecoin for Bitcoin Accumulation

Step 1: Identifying Market Opportunities for Litecoin Investment

Monitor the BTC-to-LTC ratio to spot when Litecoin is undervalued compared to Bitcoin. A high ratio, such as 944:1, signals a strong buying opportunity for Litecoin using USD or Bitcoin, indicating its trading at a significant discount.

Step 2: Accumulating Litecoin at Favorable Ratios

At a ratio like 944:1, accumulating Litecoin becomes a strategic move while its value is relatively low. This sets the stage for potential future gains as the ratio compresses.

Step 3: Setting Sell Targets as the Ratio Compresses

Set sell orders at key levels of the BTC-to-LTC ratio. 

Step 4: Timing Trades with Market Cycles

Understanding the market cycles of both Litecoin and Bitcoin is required. Bitcoin often leads the market, with Litecoin following. Selling at the right points during these bull markets can maximize Bitcoin accumulation.

Step 5: Rebalancing the Portfolio

After completing Litecoin sales for Bitcoin, it’s important to rebalance the portfolio based on current market conditions. This approach allows for capturing profits during Litecoin’s price spikes and accumulating more Bitcoin over time, adjusting as needed with the evolving market.

This strategy leverages Litecoin’s cyclical movement relative to Bitcoin, offering a structured approach to accumulating more Bitcoin through strategic Litecoin trades.

Risks and Considerations

While using Litecoin for Bitcoin accumulation holds promise, it comes with notable risks. One key risk is that the market may not validate the need for a “digital silver,” Bitcoin could continue to thrive independently, without Litecoin or any complementary asset playing a significant role. It’s possible that digital gold (Bitcoin) may not need a digital silver to succeed.

Additionally, there’s the risk of other competing coins gaining traction in the payment space, such as digital silver like Kaspa , which could diminish Litecoin’s relevance. 

Beyond these larger risks, investors should also consider the following:

• Market volatility: Litecoin and Bitcoin are prone to significant price swings, making timing trades difficult.
• Liquidity: Converting Litecoin to Bitcoin at ideal price points may be tough during periods of high volatility.
• Transaction challenges: High transaction fees or network congestion could complicate executing trades during key moments.
• Timing the market: The success of this strategy relies heavily on accurately timing the BTC-to-LTC ratio fluctuations.
• Difficulty to sell: Litecoin could experience sharp and rapid fluctuations in the BTC-to-LTC ratio, making it difficult to time trades precisely. Which is why sell orders are reequired.

Conclusion

Investing in Litecoin in September 2024 presents a rare and compelling opportunity to accumulate more Bitcoin, thanks to the unusually wide BTC-to-LTC ratio of 944:1. 

By adopting a structured strategy, buying Litecoin when the ratio is high and selling at key compression points, around 200:1, investors can optimize returns on  Bitcoin using Litecoin,  leveraging Bitcoin’s cyclical nature. 

However, this strategy comes with risks, such as market volatility, liquidity challenges, and the difficulty of accurately timing trades and being confident that the market will eventually choose Litecoin to be digital silver. 

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About the Author

Andrew Kamsky

Andrew Kamsky is a writer and chart analyst, holding a degree in Economics and an ACCA certification. Andrew’s professional background spans roles at a Big Four accountancy firm, a fintech bank, and a chart analyst position at a listed bank focusing on foreign currency hedging. Beyond his financial career, Andrew is passionate about music, glass neon lights and travel.

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