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Litecoin Addresses Pump But Price Recedes Just as Quickly

Last Updated December 12, 2023 5:34 PM
Josh Adams
Last Updated December 12, 2023 5:34 PM
Key Takeaways
  • Litecoin (LTC), a fork of Bitcoin’s source code, is an unpredictable beast.
  • Earlier this year, traders were disappointed when LTC fell after its scheduled halving event.
  • Now it’s seen an active address spike, but gains were transient.

Crypto enthusiasts are turning their sights on Litecoin (LTC) as the cryptocurrency experienced a surge in popularity. Litecoin’s network reached an all-time high of over 1.4 million active addresses on December 8, according to data from IntoTheBlock .

That follows a previous spike on December 5, when active addresses reached $751k. 

What is Litecoin?

Created in 2011 as a fork of Bitcoin’s source code, Litecoin aimed to complement Bitcoin by addressing concerns over speed and accessibility. The “lighter” cryptocurrency processes block four times faster than Bitcoin, enabling cheaper and quicker payments. Litecoin’s blockchain also utilizes a different mining algorithm called Scrypt, designed to allow regular users to participate in securing the network with consumer hardware before specialized equipment squeezed out the little guy.

Just as Bitcoin’s supply is limited and released through regular “halving” events, Litecoin also controls inflation through halving the mining reward every four years. August 2023 marked Litecoin’s third halving, reducing the mining reward from 12.5 LTC per block to 6.25. 

Beyond the faster transactions and more accessible mining, Litecoin serves as a real-world test bed for Bitcoin innovations. Upgrades like Segregated Witness (SegWit ) were first rolled out on Litecoin before being adopted on Bitcoin. The relationship has led many to describe Litecoin as the silver to Bitcoin as digital gold.

Litecoin Halving: An Unexpected Dip

Litecoin’s halving took place on August 2, 2023. Although its price movement afterwards was not what many expected. It significantly diverged from the typical market response observed in Bitcoin (BTC) halvings. Contrary to expectations, the LTC price experienced a notable decline.

Leading up to the halving, there was a substantial accumulation of LTC by large wallet investors, indicating a ‘buy the rumor’ sentiment. However, post-halving, the price of Litecoin dropped sharply, from a high of $94.50 to $85.61—a dip of approximately 10%.

LTC dropped before its halving and continued to do so afterwards.
Litecoin (LTC) price before and after its halving. Source: CoinMarketCap.

Approximately one month before on July 3, LTC hit its yearly high of $113. Surely, a rally in preparation for the halving? Although on July 16, exactly one week before the scheduled dip in the mining reward, LTC had fallen to $90. At the time of writing, on December 12, the price sits at approximately $72 according to CoinMarketCap .

So What About the Recent Address Spike?

Drawing concrete links between halvings, price movement, and trader behavior is usually fraught with risk and uncertainty. 

Litecoin (LTC) is an unpredictable beast.
Source: IntoTheBlock

However, with that said, we have seen a notable and sustained price rally throughout the recent spikes in active addresses—one on December 5, another on December 8. With a slight delay, each one appears to add momentum to the price pump. That is, until the active addresses fell off again (see chart). 

However, as active addresses quickly receded, so did the price. Just after the record number of active addresses, the price hit $78. Far off LTC’s best for the year. Now sitting at $72, the lesson is clear: grab your price spikes whilst you can.

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