The Litecoin Halving and Price Changes
Litecoin (LTC) made the news recently when it halved the block reward for its miners. Litecoin, which is the 5th biggest cryptocurrency in terms of market cap, made the change on the 5th of August.
This event marked an important event for the miners, because when the blockchain met the trigger block level it automatically triggered the ‘halving’. So when the block height reached 1,680,000, the rewards for miners was instantly reduced by half.
Now the reward for each block is 12.5 LTC instead of the 25 LTC previously. Not good news if you're a Litecoin miner.
This network feature has been designed by Litecoin to reduce the amount of mining rewards by each 840,000 blocks. To picture this time wise, that’s about every 4 years. So the next halving will take place in August 2023.
This recent halving means that there will be fewer Litecoins added to the market from the 5th of August onward. As a result it’s likely that the mining output or profitability will decrease as a result of the halving. This is because the mining difficulty level will also change, besides the offer of fewer rewards. Many miners are likely to move to other rival blockchains which will lead to an overall decrease in the hash rate.
However, there are still around 63 million LTC out of the total 84 million circulating. This leaves a good number of 21 million blocks left available for miners to mine. This figure when combined with the current LTC value, may still be appealing enough for some miners to stay for the future – even if the market will be more competitive.
But what does this all mean if own any LTC coins? Well because the upcoming halving was expected, many traders were aware of possible volatility in the market after the event. Although it’s only been a few weeks since the reduction, there has been some price volatility since.
On the actual day of the halving the LTC price increased by 10% to reach $100.38, however the price gradually returned to the pre–halving price of around $92 within a day. Generally a lot of people were expecting a lot more price increases after the halving situation, but instead it’s been fairly lacklustre after the initial spike.
In face after the price spike, the Litecoin price has gradually decreased since, and as of the end of August the LTC price is around $75.
This might be of some concern if you’re a holder of Litecoin, especially as the crypto was doing so well for the start of the year. In fact LTC’s price grew from $30 in January to a peak of $142 in June, then slowly decreased ahead of the halving in August, but still sat above the $75 mark.
It’s a fairly different situation compared to August 2015 when Litecoin’s last halving happened. Back then the LTC price peaked in July and lost nearly 50% in value by the time the reduction happened. Yet in the aftermath of the 2015 halving, the price rose up by 75%.
Whilst 2019 may not have followed the pattern of 2015 so far, many investors still believe that Litecoin has a positive future, even after the disappointing halving price performance.
The main reason for this is the future planned development of Litecoin, as announced by its founder Charlie Lee. In a recent tweet Lee announced that “it‘s time now for me to shift focus from adoption back to development...and I will get the ball rolling.” The fact that there is future development in the works can only be good news.
That's because this planned development on the Litecoin network will also include Confidential Transactions updates. Development of these features is important as it will improve the coin’s performance – and hopefully in addition, its price.
It’s worth keeping an eye on the future Litecoin price to see if it can recover and rise again for the end of 2019, as well as for any other key situations that could affect the crypto market.