On August 5, 2019, after reaching the block height of 1,680,000, the Litecoin network automatically reduced its mining reward from 25 LTC to 12.5 LTC. This “halvening” event has been expected for months — it’s a fundamental part of Litecoin’s design — but the ultimate impact of it is still very much up in the air. With the supply of new LTC slashed by 50%, will the price rise or fall from its current $99 value? No one knows.
In this post, we take a look at five likely price scenarios for LTC for the near future.
1. Litecoin’s price explodes upward. It’s hard to argue with the Law of Supply and Demand. The halving didn’t just drop the reward for mining a Litecoin block to 12.5 LTC, it also dramatically reduced the supply of new tokens available to purchase. Decreased supply tends to create increased demand, typically resulting higher prices. Assuming that LTC’s real-world use cases haven’t changed, and that demand for new LTC stays stable, it’s inevitable that the token’s price will start to climb. LTC has seen major price movements as recently as 2017, climbing from around $4.50 to over $365 in less than a year. That’s an 8,100% increase! If LTC saw the same percentage increase today, by August of 2020 a single Litecoin would be worth around $8,020.
2. Litecoin’s price implodes down. The 2019 “halvening” is the second such event in Litecoin’s history. The first one happened on Aug. 26, 2015, and it actually resulted in a price slump that lasted for an entire year. Like today, Litecoin investors saw a ton of potential in LTC’s slashed block reward in 2015, driving the price up from around $1.40 in early spring to an all-time-high of around $8.40 by mid-June. Shortly before the block reward dropped, however, the price imploded down to just $2.80. Barring one short-lived rally, LTC would stay below the $5 price point until the spring of 2017.
3. Short-term price volatility, long-term stability. Since 2017, LTC’s price has been all over the place. In the last year, the token as sold for as little as $23.63 and as much as $142.16. Much of this movement has been in response to greater cryptocurrency trends, and has little to do with Litecoin specifically. But Litecoin does have its own value proposition, due in large part to the token’s adoption by Asian tech startups as a viable — not to mention faster — alternative to bitcoin’s network. If actual users rely on Litecoin’s network for their daily operations, the decreased supply of coins will tend to push the price higher, encouraging speculators to cash out in the process. The result of this is an LTC price that moves up and down erratically, but with an overall upward momentum for several months. As the market adjusts to the new block reward, the price will eventually stabilize. It’s likely that this newly stable price will be significantly higher than today’s $99 range.
4. Short-term price volatility, LTC destabilizes long-term. While Litecoin has been a Top 10 cryptocurrency token since its launch in October of 2011, its spot on the charts is far from guaranteed. Litecoin was designed to be a faster, more experimental version of bitcoin, and the two projects have a very similar design philosophy. Litecoin also shares much of bitcoin’s code, making it a great place to test ideas like segregated witness (segwit) and Lighting Network (LN) payments, but at the cost of allowing for radically different approaches to how a cryptocurrency network can operate. Newer cryptocurrencies, such as Ethereum (ETH) and Ripple (XRP), offer distinct alternatives to bitcoin’s vision. Should LTC’s price fizzle following its halving event, it could be an indication that Litecoin’s once-innovative network is no longer a vital part of the overall cryptocurrency ecosystem. In that situation, LTC could quickly join the ranks of other once-promising tokens — DOGE, Zcash, WAVES — that now struggle for market share within the Top 100.
5. Slight increase or decrease in price, not much else changes. If there’s one thing Litecoin has going for it, it’s a strong reputation as a reliable network with a fairly valued token. When the overall market goes up, LTC goes up with it. When the market crashes, LTC crashes with everything else. Litecoin has rarely been a leader in the cryptocurrency market, but that’s also one of its biggest selling points. While the bitcoin community was ripping itself apart over block size, finally resulting in the highly contentious Bitcoin Cash (BCH) fork, Litecoin was puttering along as normal. When alt-coins and ICOs were creating crashing tidal waves of price movement, Litecoin kept doing business as usual. Ultimately, LTC’s real value may come from the fact that it simply works as intended, with a largely stable, slightly boring price that fully reflects its stubborn predictability.