Litecoin (LTC), losses more than 6% in price after block reward halving

In contrast to Bitcoin’s halving event, Litecoin (LTC), one of the leading altcoins, did not experience the anticipated surge in attention after its block reward halving. Following the halving, LTC’s price dropped by over 6% and is currently trading at $86.78 with a market capitalization of $6.4 billion.

The highly awaited block reward halving for the Litecoin Blockchain occurred on August 2nd at block number 2,520,000, reducing the reward per block for miners from 12.5 LTC to 6.25 LTC.

The market reaction to Litecoin’s halving followed the “buy the rumor, sell the news” trading strategy. Santiment, a data provider, observed an increase in LTC’s social dominance and noted panic among many investors due to heightened volatility, stating that “This period of instability proves to be difficult to remain patient. What we have recently witnessed is a strong investor capitulation.”

Historical price data from previous block reward halvings indicates that Litecoin’s price declined over several months following those events. Despite increasing its value by 60% from the beginning of the month until the start of July, reaching over $112, Litecoin has already lost more than 6% of its value after this recent halving.

Kyle Doane, a trader at Arca, explained the decrease in investor interest, attributing it to the fact that most LTC long positions were established earlier in the year when the block reward halving narrative was dominant. Since then, the market’s focus has shifted to spot Bitcoin ETF applications, causing the appeal of the LTC narrative to diminish.

Will Bitcoin Share the Same Fate as Litecoin?

Investors and leading analysts in the cryptocurrency market are expressing optimism about Bitcoin’s upcoming major block reward halving, expected to take place in April 2024. Many analysts believe that Bitcoin is nearing its block reward halving and anticipate a significant price rally. However, the lack of a substantial surge in Litecoin’s price after its block reward halving has raised questions about whether Bitcoin will follow a similar pattern. Previous data reveals that Bitcoin has followed a distinct trajectory from Litecoin, with notable price rallies occurring after its block reward halvings.

Bitcoin, being the largest cryptocurrency in the market, typically undergoes significant price movements during block reward halvings, often experiencing price increases before and after the event. For instance, following the block reward halving in May 2020, Bitcoin’s price surged nearly sevenfold in the subsequent year before encountering a sharp decline. Nevertheless, the interest shown by major asset management companies like BlackRock in BTC suggests that such an outcome for Bitcoin is highly unlikely.

By 4niso

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