LTC is one of the coins that hasn’t received as much attention from the public as, say, BTC, but it is still an excellent performer by crypto standards. It is also one of the coins that has remained in the top 10 coins consistently for the past year amidst great turmoil. Therefore, we can conclude that it is a solid choice for any investor looking for opportunities in the crypto market. Also just like all other coins (with the exception of tether) it has dropped in value significantly this year, but its value has tapered off recently. Now the focus is on the remaining few weeks of the year and 2019, which is what we shall be focusing on. (Do you want to know: How Did Tether Crypto Survive The Crypto Market Selloff?)
All you need to know about LTC
Before you invest in any coin, you should first know everything you should about it so as to determine its viability as an investment option. As for LTC, it has an extensive history and is also one of the earliest coins to come into existence. It was first introduced in 2011 as a fork of BTC, thus sometimes it is referred to as a BTC clone. The founder is Charlie Lee, who used to work for Google until he realized the potential of crypto. His idea was to create a better coin without the limitations of BTC, and so he made a few improvements to LTC over BTC. (Read about: BTC Price Prediction Update And Forecast For Autumn 2018)
How is it different from BTC?
The main difference between the two was that LTC uses Scrypt as an algorithm to mine blocks while BTC uses SHA-256. Both of them are proof-of-work systems, but the latter is not easily compatible with ASICs (Application-Specific Integrated Circuits). As soon as coins became more valuable, some enterprising individuals realized they could mine the coins for huge profits, and so they created mining pools. These are facilities with multiple GPUs that can process the algorithms necessary for mining. SHA-256 mining procedures, like those used in BTC, have been exploited by these mining pools, thereby creating a kind of monopoly instead of the democratic process envisioned by Satoshi Nakamoto. (Everything about coins in: The lowdown on crypto)
It is because of this weakness in the BTC network that it has been nearly impossible to make any upgrades to the network, as the mining pools hold most of the rights to the network and can block any changes. For example, the fork in BTC that led to BTC Cash (BCC) was because there was a lack of consensus among BTC miners in the network to implement SegWit. Because only a portion of miners had activated SegWit, their transactions could no longer be processed by the previous system, and a new blockchain was formed. By the way, both BTC and LTC have activated SegWit although LTC did it much earlier back in May, 2017. (BTC Cash Vs. BTC: Confrontation Forecast in 2018)
SegWit essentially allows for the creation of ‘sidechains’ that run parallel to the main blockchain. It is on these sidechains that transactions are processed hence there isn’t a need to include all signature data on the main blockchain, making the blockchain less loaded.
Charlie Lee saw this coming, and made LTC use Scrypt instead, which is a memory hard problem. This means that the mining pools cannot gain anything by mining LTC since it requires a lot of memory rather than raw processing power. This feature made it possible for anyone to mine LTC even on a personal computer, retaining the decentralized nature of the coin. Even though some manufacturers have still managed to come up with ASICs for mining memory hard problems based on Scrypt, they are still not as popular as those used in mining BTC. This is because they are much more expensive as memory is costlier than processors. (These are: The Most Prominent Crypto Hacks and Scams You Should Know)
Apart from the differences in mining, LTC also processes transactions 4 times faster than BTC. This is a huge difference because a single transaction of BTC can take as long as 10 minutes, while that of LTC would only take 2.5 minutes. This is despite LTC having the same block size as BTC at 1MB. Due to the speed in LTC’s network, the coin is sometimes preferred as a payment method over BTC, and many merchants now accept the coin as a form of payment. (Do you know: What Is The Future Of Crypto In Finance?)
Besides the use of SegWit, Charlie Lee also implemented an additional measure, charging for tiny charges. While you may think this would make LTC costlier, it really doesn’t; think of it as a nuisance charge. Then consider the possibility of a flood attack. Some time back in 2015, BTC received a ‘flood attack’ that consisted of numerous tiny transactions intended to slow the network down. At the time, there were as many as 80,000 transactions in line. To avoid this, there is a small charge for such small transactions to deter hackers from attempting such a flood attack. (Finally: Crypto Ads Banned From Google And Social Media)
What about its value?
These features of LTC did not go unnoticed, and the coin quickly became very popular among crypto enthusiasts. Of course, this was back in the day when crypto was only mentioned in passing and not taken as seriously as we see today. So the value of LTC didn’t vary too much in the first 2 years of its existence, until November 2013. This is when people started saying LTC is silver to BTC’s gold. In just three days, the value of LTC jumped from around $10 to just over $50 while the total market cap of the coin exceeded $1 billion for the first time. There wasn’t any certain reason for the spike in value, other than its association with BTC. Since BTC was starting to grow, interest in LTC grew as well and investors sought to include multiple coins in their portfolios. (Investor Tips 2019: What To Include In Your Portfolio)
After this huge spike, LTC value dropped and remained low for the next 3 years, remaining under $10 for most of that time and even coming close to $1 at times. All this time, it seemed, the entire crypto market was going through a very rough patch, until 2017 came along. The coin began to pick up value all through the year from a low of $4.50 to an all-time high of $356 toward the end of the year. This was a 7,800% increase in value, much higher compared to that of BTC during that period. From then on, things have been going downhill just as they have for BTC. (Investing In Cryptocurrencies: Watch These 5 Profitable Cryptocurrencies)
Relationship with BTC
One thing worth noting about LTC is its peculiar relationship with BTC, where one seems to trace the other’s path. It should not be surprising since they share a similar code, after all, LTC is a copy of BTC. Looking at the charts confirms this observation, where the two coins follow a similar pattern. This is definitely something to note as an investor, because the same factors that affect BTC also do LTC. (Have you ever wondered: Will Cryptocurrencies Recover From Their Price Slump In 2018?)
Every coin has its own peculiarities, and LTC is no different. To understand these factors, we have to look at the history of the coin and what made its value to fluctuate. In 2017, you will notice that the coin’s value kept rising all through 2017 steadily just like BTC’s value, except for a few exceptions. Between 11th June and 11th July, for example, BTC’s value dropped from $2,800 to $1,800 while LTC’s value rose from around $30 to $50. Here we notice a bit of an inverse relationship between the two, so what happened. Well, you might want to remember that LTC had just implemented SegWit a month earlier, and this had lessened the load on the LTC network significantly. (Ask yourself: Does BTC Stand A Chance To Becoming The Worldwide currency?)
Thanks to SegWit, the LTC network was able to handle more transactions simultaneously unlike BTC. If you may remember, it was during this time that there were so many transactions on the BTC network that the transaction speed became terrible. Users could wait up to a week just to get their transactions verified, or have to pay additional fees up to $50 to have their transactions sped up along the network. These are the problems that led to the slowdowns on BTC, but LTC had none. As a result, people opted for LTC as an alternative currency over BTC, which explains why their values went opposite one another. It showed that LTC could replace BTC in a pinch when the need arose, and this is one thing you could watch out for.
This relationship between LTC and BTC will be essential in predicting the value of the coin in future because, for better or worse, the two are inextricably linked.
What do LTC’s features mean for its future in 2019?
Now that you know about LTC and the factors that make it different from other coins, especially BTC, it’s time to look at how they affect its future. Just like all other coins, LTC has seen declining volume of transactions over the past several months, but there is still hope. In fact, LTC in particular has several advantages over many other coins that make it potentially profitable in the long term. (Here are the: 5 Tips to Choosing the Ideal Crypto Exchange)
Why is LTC primed for greatness?
Whenever a company gets too big, it becomes difficult to change its operations, which is exactly what has happened to BTC. With problems in pushing for changes like the aforementioned SegWit, LTC has become a pioneer in improving crypto. One of the additions made to the network was the implementation of Lightning Network. This advancement to crypto has been hailed as the solution to many problems in crypto, so it is worth understanding it in detail. (Make use of your coins through one of the: 5 Most Popular Uses of BTC and other Coins)
Lightning network creates a kind of layer on top of the blockchain where two people can make transactions directly without involving a 4rd party, in this case, the miner. Let’s say you wanted to pay for a particular service or product, you and the vendor would open a virtual wallet that holds a specific number of Litecoin. This then becomes the lightning channel because you are conducting direct transactions with one another. Once you have completed the transactions, the balance is settled and then registered on the blockchain. (Everyone should have the: 10 Most Important Resources to a Cryptocurrency Trader)
Thanks to this improvement, transaction fees would be cut down significantly because the miner doesn’t need to be paid. Add to that, the transaction speed is almost instantaneous because the transaction doesn’t have to be processed into a block. Lightning Network is going to change how people transact small and micro payments, although it would still be secure to use the main blockchain for larger transactions as it is more secure. (Learn about: Cryptocurrency Regulations Around the World)
Litecoin first tested Lightning network in September, 2017 when Charlie Lee received 0.01 Litecoin from another Litecoin team developer. The technology is not yet available to everyone, but given the speed at which Litecoin implements new changes, Lightning Network is just around the corner. When this finally happens, Litecoin will definitely become a favourite coin for shopping and payment. (Do you know: What is An ICO and How Can I Make Money On It?)
Even with so much potential, the only way to succeed is to actually get users on the network. Bitcoin is still the most popular cryptocurrency with a majority share among all other coins. To bridge the gap, Litecoin introduced atomic swaps, which allows for an exchange of cryptocurrencies. In the past, if you wanted to exchange one coin for another, you would have to either involve an exchange or an escrow account. Atomic swaps use smart contracts to settle the transaction for both parties and it is only concluded when both parties have received their coins. (Master these: 5 tips to forming the most promising cryptocurrency investment portfolio for 2018)
Atomic Swaps is going to be great for Litecoin because holders of the coin can still perform transactions even if a merchant does not accept Litecoin. Because of Bitcoin’s dominance, there are many more merchants who accept Bitcoin rather than Litecoin. Assume you’re at a restaurant that took only Bitcoin and yet you only had Litecoin, instead of panicking, Atomic Swaps would allow you to instantaneously convert your Litecoin to Bitcoin and complete the transaction. Such a feature would make Litecoin more favourable to ‘hodlers’ regardless of where they want to use the coin.
These are just some of the features that make Litecoin have a lot of potential, but mostly it’s about its relationship with Bitcoin. If users become less confident in Bitcoin, then Litecoin becomes more preferable. As we are going to see, this makes the coin very special.
Fundamental analysis for Litecoin in 2019
All the features in the world wouldn’t make Litecoin great if it wasn’t for its position in the crypto markets globally. According to CoinMarketCap, Litecoin is currently the 7th top coin in the world and has a market cap above $3 billion. The other 5 coins besides Bitcoin and Bitcoin Cash that are ahead of it all have a specific function. For example, Ethereum is meant more for creating decentralized apps rather than payment. That effectively makes Litecoin the 3rd most popular payment coin, and the impact is notable. In the dark web, Litecoin is the second most popular coin behind Bitcoin. This may come as a surprise because it doesn’t have the privacy features of, say, Monero, but its speed of transactions makes up for it. (Some of the: Alternative Cryptocurrencies beside Bitcoin to invest in)
Litecoin is not only popular in the dark web, but it is widely accepted by hundreds of merchants, wallets and exchanges around the world. That is very important for a coin because no one would want to transact with you if they had no way of converting the coins to actual money. Litecoin can be found on all the top crypto exchanges, and it is especially popular in China. As you may remember from a previous article, China is one of the world’s largest crypto markets in the world, and the popularity of this coin means it will never lack users. Furthermore, Litecoin has also been receiving a lot of media attention lately, and that explains why it is going to become popular. In a study by Forbes, they found that millennials preferred to invest in Litecoin more than any other payment coin. (Which Are The Most Influential Cryptocurrency Markets By Country?)
What this means is that people are getting tired of Bitcoin, and would rather prefer Litecoin for transactions. Even in future, there is some uncertainty with Bitcoin. The world’s most popular coin has a total limit of 21 coins, yet Chinalysis research showed that there may be as many as 3.79 Bitcoins lost forever. Unlike Bitcoin, Litecoin has a total number of coins set at 84 million, which would be more suitable for investors looking at the future. (Do you know: What Would Happen To Bitcoin Price When It Is All Mined?)
Unfortunately, Litecoin does not receive as much attention as Bitcoin from crypto experts, but there have still been some predictions. One of these comes from Finder, which is a team of 10 experts who have all worked in the Fintech and crypto industries. According to them, Litecoin will probably reach as high as $150 by the end of 2018 and then keep going higher in 2019. Then it will go further up and reach the $300 region in 2019 and maybe even end the year at $500 if all goes well. They explained this by noting how Litecoin has remained within the $100 and $166 region for most of the year, stating that any higher predictions would be too optimistic. (Did you know: How easy is it to trade Cryptocurrency in the Forex market?)
This seems to be a conservative prediction, and coming from such a knowledgeable group of experts, it is more trustworthy that opinions of enthusiasts. These enthusiasts believe we could see Litecoin reach $3,500 in 2019! Their argument is that since global fiat currencies have a $5 trillion market cap and gold has a $7 trillion market cap, Litecoin could achieve 2.5% of this asset pool. By that argument, then it would be possible for LTC to reach the said $3,500 value, only it is too optimistic. Even though there is a lot of potential in Litecoin and cryptocurrencies in general, believing in such a high return is unrealistic.
Due to all these reasons, the value of Litecoin will certainly continue to go up rather than down. To predict an accurate number, though, that would require a technical analysis.
Technical analysis for Litecoin in 2019
To analyse Litecoin’s value, we have to use several tools of technical analysis and apply them on a live Litecoin chart. The one below is just a screenshot with the support and resistance levels drawn on it to show the most important price levels that may affect the coin.
At first we note the all-time high value of around $368 reached by the coin toward the end of 2017 thanks to increasing demand for crypto across the industry. This was followed in a cascading decline as Litecoin hit several support levels. The first was set at around $236 where there was a lot of resistance against the coin going lower. However, there was just too much negative sentiment in the markets to overcome the support level. If we were to include the stochastic oscillator, you will see how the value of LTC was held up by the support level vigorously, but in the end there was just too much downward pressure.
In the end, prices dropped down to hit the next support level around $100, which is a psychological level. Here too, there was a lot of support including additional support from the 200-day moving average. This is why the $100 support level was tested twice before prices finally broke below this level. After this final breakthrough below $100 and the 200-day SMA, values have continued steadily downwards to the current level of $53 at the time of publishing. The $35 support is yet to be tested, and all signs point to further declines in value with prices trending below the 200-day SMA.
This means we’re going to see LTC go further down to the $35 level in 2018 and probably even into the early weeks of 2019. Afterwards is when we will start to see the coin’s value increase once more. Even by moderate standards, Litecoin will probably not go much higher than $100 unless something dramatic happens.
The main factor that could change things would be the Bitcoin ETFs that the SEC is currently considering. They have already rejected several Bitcoin ETFs so far this year, but the most promising one is by VanEck whose ETF is still under review. If their ETF is finally accepted, it would show that coins are much more than just crypto but actual assets. The date for the SEC decision is in February, 2019, and this could determine the direction of Litecoin for the entire 2019. Another issue would be the implementation of Lightning Network to the public expected to happen sometime in 2019, and that could also give it a boost in value.
It is very important not to be too optimistic whenever the topic of cryptocurrencies comes up as many enthusiasts are. The unbiased analysis tells us that there is little hope on Litecoin going above $100 any time soon. A lot of activity is still going on under the hood, but the overall mood among investors and users is not positive. A lot of people have been hurt by the dip in crypto prices, and this is not going to change any time soon. It would take something drastic to change people’s views on crypto once again. The good news is that when the news finally turns around, as it most likely will, Litecoin will benefit by being in Bitcoin’s shadow.
Who’s better to talk about the future of Litecoin than the coin’s own founder Lee. Here is a short video of him: