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While the cryptocurrency market was going through a heavy drop with the FTX collapse, Litecoin (LTC) managed to stand out on the upside. But is the cryptocurrency's 24% monthly rally just a hoax?
Let's take a look at Litecoin to try to answer that question.
First, the operation and value proposition of the altcoin is nothing new. It has been a solid coin since it first came out on the market, as the idea of a cryptocurrency that could transact faster and cheaper than Bitcoin (BTC) was a good one.
However, as time went on, Litecoin's fundamentals were not enough to keep LTC prominent in the top 10 by market capitalization.
The lack of news, the time-consuming promise of privacy and the arrival of more scalable cryptos than the older altcoin made the cryptocurrency fall into disuse, something that directly impacted Litecoin's capitalization.
In addition to being considered an outdated blockchain, the arrival of privacy on the LTC network was not so well received. This is because cryptocurrency exchanges, for regulatory reasons, end up moving away from anonymous assets.
Thus, a big question arises:
What made Litecoin soar in recent days?
One of the factors that may have influenced the growth of LTC was the pre-halving run.
The event that will cut Litecoin's issuance in half is expected to occur in July 2023. In 2015 and 2019, the months leading up to the halving of the cryptocurrency also caused it to be traded on the bull side.
In 2022, this movement meant that LTC not only grew against the US dollar. Litecoin performed well against Bitcoin, rising 50% against the primary cryptocurrency.
In addition, Litecoin is one of the cryptocurrencies with the closest technology to BTC. With the idea that the maximalism around the leading cryptocurrency grew with the FTX crash, LTC ended up picking up some of that hype.
This rise is far from lasting
With the halving being priced in now, the chances of Litecoin being able to sustain this rise until July 2023 are low.
In addition to not having fundamentals that suit the current market, LTC carries with it the lack of confidence of older investors on the crypto market. That is because in 2017, cryptocurrency founder Charlie Lee sold his holdings near the altcoin's all-time high.
Without the interest of more experienced investors, LTC may not reach the heart of new entrants to the market. Miners were also discouraged by the altcoin, as the profitability of mining LTC dropped sharply with the loss of capitalization of the cryptocurrency.
With an increasingly less interesting blockchain given the popularity of DeFi and NFTs, areas that attract the attention of more experienced investors and new crypto users, Litecoin's rise could be due to a scam. This may be even more likely considering that LTC, although similar in some respects to the primary cryptocurrency, is not Bitcoin and will never be as decentralized as the original cryptocurrency.
Tomiwabold Olajide
