The Litecoin Price is Crashing: Here's Why

litecoin conceptLitecoin developer Charlie Lee shocked many community members last month when he said "Litecoin does not need development right now." Rather, he said, the coin needed users, liquidity, and merchant acceptance to succeed in the long term. However, the coin has struggled to achieve any of those aspirations, and the bitcoin price decline has weakened faith in the cryptocurrency industry as a whole. Consequently, investors have begun losing faith in altcoins, and in turn the litecoin price is bottoming out.

Also read: Litecoin and Dogecoin to Join Forces for Charity

Litecoin Price Tanking

The litecoin price declined consistently throughout 2014 and has continued to fall during January. As recently as June, the litecoin price exceeded $10. During the past month, the litecoin price declined from $3 to $1.40--an alarming decline for one of the industry's most prominent coins.

Litecoin price January 16
As this OKCoin chart demonstrates, the litecoin price has declined more than 50% in the last month alone.

Litecoin Price Linked to Bitcoin Price

Connor Black, CEO of digital currency service Harborly, told CCN he believes the litecoin price decline is a by-product of the bitcoin price downtrend. Even though litecoin's largest trading pair is USD, bitcoin's vastly superior market cap (among cryptocurrencies) governs the direction of the litecoin price.

Harborly
Harborly is a digital currency service that allows users to buy and sell bitcoin and litecoin.

A major problem with the Litecoin price is the currency's failure to distinguish itself as little more than the speculative younger brother of Bitcoin.

Looking at this last year you see that Bitcoin and Litecoin have had strong price correlations, with Litecoin usually trending further in either direction. When Bitcoin falls Litecoin plunges, and when Bitcoin rises Litecoin soars.

Indeed, altcoin market caps have (generally) evaporated at an even more alarming rate than bitcoin's. However, Black believes litecoin can regain its swagger if the bitcoin price improves and the cryptocurrency community recognizes Litecoin's benefits.

For Litecoin to get back on track, the digital currency community needs to recognize some of the big benefits Litecoin can offer. One benefit being that Litecoin transactions are about 4X faster than Bitcoin's. This can be utilized with great success from casual spending to remittances, ensuring faster service time and less exposure to market volatility.

Disclosure: The author is not invested in Litecoin

Chart from OKCoin; other images from Litecoin and Shutterstock.

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About the author

Josiah Wilmoth
Josiah Wilmoth

Josiah is the US Editor at CCN, where he focuses on financial markets and cryptocurrencies. He has written over 2,000 articles since joining CCN in 2014. His work has also been featured on ZeroHedge, Yahoo Finance, and Investing.com. He holds bitcoin, but does not engage in day trading. He lives in rural Virginia. Follow him on Twitter @y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.