In just over a quarter of a year, Litecoin will be halving. The Mining Reward will be reduced from 25 LTC to 12.5 LTC in 128 days. This event, which takes place every four years at Bitcoin and Litecoin, is intended to boost the Litecoin course. What investors can learn from the past.
One of the basic characteristics of Bitcoin is the limited amount of coins. The so-called supply is not only currently limited to approximately 17.6 million: The rewards distributed to the miners are halved approximately every four years. As a result, the maximum supply is already set at around 21 million Bitcoin.
Litecoin, Bitcoin’s little brother, is very similar to this cryptocurrency: “Here and there, supply is limited, both now and in the long term. The only difference is that both current and maximum supply are larger. The current number of Litecoins is 61 million and in the long run this number is limited to 84 million Litecoins. The fact that both the current and the maximum supply differ by about a factor of four is no coincidence, as Litecoin’s block time is only a quarter of that of Bitcoin.
Is it Halvings that rallies prices?
In 2016 there were several optimistic voices that saw a bullish signal in a halving. If one assumes a rising Bitcoin adaptation, the shortage of supply would lead to a price increase. In fact, this pattern has already been observed twice at Bitcoin:
seems like you’re dealing with cycles: There were bubbles in 2011, 2014 and 2017, followed by longer bear markets. Some time before halving, the downward trend was broken in 2012 and 2015. A first sign of the upcoming spring in crypto winter. Until halving, the Bitcoin price was able to make up some lost ground: The share price could almost triple between 2012 and 2013 and between 2015 and 2016.
By the way, it is possible that the Bitcoin price may currently break through the downward trend again. In any case, this resistance will be tested. Should this be the case, investors can look forward to a Bitcoin price of USD 12,000 by 23 May 2020, the forecasted next halving date, should the price triple again.
To distribute more Hopium: Halving was only the beginning. After that there was the right bull market. Between 2013 and 2014 the Bitcoin price rose by almost 10,000 percent, between 2016 and 2018 by 2,700 percent. Where will the next Bull Run take us? If one assumes an increase of “only” 1,000 percent compared to previous bull markets, which is almost conservative, investors could look forward to Bitcoin prices of around USD 50,000. But, as I said, this is Hopium, certainly exaggerated hopes.
Litecoin: Downward trend already broken through
Moreover, this article is less about Bitcoin. We looked at the big brother Litecoins mainly to learn from the past. Even if Litecoin can look back on only one halving so far, the findings described above can be applied. Also here the Litecoin course broke some time before the Halving the downward trend:
The price increase up to halving was only 80 percent. If one takes all extreme values with one, one arrives at almost 300 percent. As in the case of Bitcoin, the gains between breaking through the downward trend and halving are rather small. In contrast to Bitcoin, Litecoin moved sideways for a long time after halving. Although the halving took place in 2015, the Litecoin price did not rise significantly until 2017. On the other hand, the Litecoin-Kuts increased by almost 13,000 percent. So good things take time.
What is very exciting about Litecoin is that the downward trend has been broken in the meantime. The Litecoin price has now been able to hold its own for several weeks against the downward trend that has persisted since the beginning of 2018. If we take the observed pre-halving developments as a basis, rates between USD 85 and USD 193 can be expected by 6 August 2019. Further rises after the halving have not yet been taken into account. Litecoin’s future therefore looks bright.