I. 4 REASONS WHY LITECOIN COULD MAKE A COMEBACK IN 2017
Litecoin used to be a top player in the crypto space, branded as the “silver to bitcoin’s gold”. During the 2013 bitcoin bubble, LTC was the #2 market and was highly correlated to the price of bitcoin.
In 2013, bitcoin gained +11,000% and litecoin gained +500% over the price of bitcoin during its peak. The price of LTC hit an all time high of around $50 on some exchanges.
The last major litecoin rally was during the summer of 2015, when a Chinese LTC Ponzi scheme managed to accumulate at least 20% of the entire supply. Most of that supply was instantly dumped and the LTC/BTC markets have been on a long bear trend since.
Litecoin lost its correlation to bitcoin after the summer pump and was left behind during most of the year long BTC bull trend. That said, its USD value has remained somewhat stable and consolidating within a tight range.
Although litecoin hasn’t been a very good market to trade for most of 2016, it’s possible that this rock is a sleeping giant ready to rise from its slumber. Here are four reasons why litecoin may hit a bullish trend reversal in 2017.
1. Chinese Exchanges Can Only Trade Spot
Recently the People’s Bank of China cracked down on major crypto exchanges. The result being that they stopped all margin trading and have eliminated the zero fees model.
This means that Chinese traders can only play in the spot markets and will have to devise entirely new strategies for making profit. The only way to make profit on the spot markets is to buy low and sell high. Traders can no longer short by selling coins they don’t have. If they want to be a participant in the crypto markets they need to own some coins.
The larger bitcoin bull trend is still intact but likely due for several months of consolidation, perhaps forming a large symmetrical triangle. Generally speaking, when the price of bitcoin stabilizes, liquidity shifts into the altcoin markets.
As it turns out, the only altcoin market available on the top Chinese bitcoin exchanges (OKCoin, Huobi and BTCChina) is litecoin. Given the choice between the two markets, the percentage gains for moving a smaller cap market like LTC can be much higher. Accumulating litecoin at the bottom of its price range is also a cheaper option than accumulating bitcoin at the top of its range. Game theory would suggest that buying litecoin has more profit potential.
Litecoin is the only altcoin that trades more volume in fiat than against BTC. The majority of litecoin’s volume is actually in CNY, which means the markets could take on a life of their own and easily become non-correlated to the price of bitcoin.
2. Segwit and Lightning Network Intergration
Litecoin is currently in the process of trying to help bitcoin’s scaling debate by moving towards the activation of Segregated Witness and Lightning Networks. Litecoin founder Charlie Lee stated in a recent post:
“Until SegWit, LN, and Confidential Transactions, I didn’t see a need for Litecoin to come out to help test features before they are on Bitcoin. So I was happy to let Litecoin go on without a lot of development. Hence my tweet about Litecoin not needing development. But with SegWit and Bitcoin’s current block scaling deadlock, I see a potential for Litecoin to help Bitcoin break through this deadlock. Litecoin can take a lead and be a positive force in the cryptocurrency space. We have been drafting behind the Bitcoin race car for many years. It’s about time to take a turn out front.”
If Litecoin implements these changes before Bitcoin, this will completely change the network’s fundamentals and offer something new to the ecosystem. That alone has the potential to attract market interest from crypto traders.
3. Growing Hash Rate
The Litecoin network’s hash rate is starting to show exponential growth. Sometimes a coin’s price can be correlated to the amount of hashing power on the network. The increased difficulty means that miners need to spend money in upgrading their equipment to be more efficient. If the cost of mining coins is on par or greater than the price, miners will hoard coins instead of immediately selling on the markets.
Litecoin is currently the second most secure blockchain in the world and it doesn’t seem like the market value is reflecting this achievement.
4. Overdue For a Reversal
If there’s one thing that can be said about the markets, it’s that trends don’t last forever. Any market that’s still alive with decent liquidity tends to go through cycles. Litecoin currently ranks #3 for crypto trading volume and is #4 for market capitalization.
LTC is currently at its lowest BTC satoshi value in years. Given that this is still one of the top crypto markets, it wouldn’t surprise me to see a bullish trend reversal in 2017.
Looking at the LTC/BTC charts we can see litecoin starting to creep past the descending trend line. If we use a fib extension off the last major high to measure the bear trend, we can see the price is hovering around the 61.8% sweet spot. If LTC starts consolidating sideways then it may be entering into the accumulate phase, which is the first period within a bull cycle.
II. REASONS TO BUY LITECOIN
We have entered the age of digital currency. Bitcoin has gone from relative obscurity to being a household name. In May, the coin smashed its way through the $2,000 barrier like an angry bull in a china shop.
Bitcoin’s dominating presence tends to drown out its contenders. But there are actually quite a few digital currencies that investors should be paying attention to.
Out of these, a handful is poised for dynamic growth. We published this report to talk about one of the most promising: Litecoin.
Over the past couple of months, Litecoin has skyrocketed alongside its digital currency peers.
It became the third currency investors could purchase on popular digital currency exchange, Coinbase. And now, a hyped up digital currency public has some questions.
- What is Litecoin?
- How is it better than Bitcoin?
- How do I invest?
Over the course of this report, we will answer those questions. It’s best to start at Litecoin’s humble beginnings.
1. What is Litecoin? Read more here
2. Why Litecoin is Unique
Bitcoin was the first digital currency in the world, and this has given it a leg up in the competition. But Bitcoin’s early arrival is also the source of many of its shortcomings.
Today the developers behind major digital currencies have identified Bitcoin’s weaknesses and altered their currencies to fix the issue.
This means that even though Bitcoin was the first technology to use certain technologies — specifically a groundbreaking network called blockchain — the currencies that followed may use that technology more efficiently.
3. The Better Blockchain
Blockchain technology is the foundation of all digital currencies. Envision it like this.
Every time a transaction or exchange happens in a digital currency network, that action is recorded in a “block.” Each of these blocks is attached to a slowly developing chain.
Anyone on the network has access to the information in the blockchain. This means that transactions are public knowledge, even if the users remain anonymous. This framework also makes digital currency very secure.
Litecoin actually uses this technology more efficiently than Bitcoin. The Litecoin blockchain generates a new block every 2.5 minutes. This is 7.5 minutes faster than Bitcoin can produce a block.
This will appeal to merchants who want a faster transaction. Of course, in the world of Bitcoin, merchants can accept a payment immediately if they forgo security. But in a digital security world that is generally unregulated, throwing caution to the wind often ends badly.
With Litecoin, you get both security and speed.
And this speed just kicked up a notch.
On May 10th, Segregated Witness (SegWit) was activated in the Litecoin blockchain. SegWit is the process in which blocks in the blockchain are made smaller by extracting signature data from transactions.
This process allows Litecoin to process lightning fast payments.
The first of these payments happened on May 11th. Money was sent from Zurich to San Francisco in under a second.
But Litecoin is valuable for more than just its speed. It also has widespread consumer appeal.
4. A Love of Rounded Numbers
In the world of digital currency, the number of coins that can exist is finite. There can never be more than a certain amount of Bitcoins in the world — and the same applies to Litecoins. But the total amount of coins that can exist varies by digital currency.
This actually works in Litecoin’s favor. Litecoin will publish more coins on the market than Bitcoin. This will appeal to consumers.
A study by Dr. Judith Holdershaw, a senior lecturer at Massey University, concluded that 57% of retail shoppers opt for a product with a rounded price. Even more telling, 4% of those customers paid more just to round the price. The proof is in the pudding: People like to pay with full numbers.
This can explain our aversion to pocket change and lose bills.
Because there will be less Bitcoin in circulation, it will have to be broken down into decimals. That means you will be paying .002 BTC for a cup of coffee.
Since more Litecoin’s can be on the market than Bitcoin, it is more likely that people will be able to buy commodities with whole numbers.
5. The Battle of Algorithms
Outside of transaction speed and volume, there is another key difference between the two currencies: their algorithms.
For those of you completely new to digital currency, digital currencies are composed of code.
In the case of Bitcoin and Litecoin, those codes use two different algorithms.
Bitcoin uses the SHA-256 hashing algorithm, Litecoin uses a scrypt hashing algorithm.
Now, both of these algorithms are powerful. But over the years, the SHA-256 has made it more complex to get Bitcoin through the mining process. Bitcoin miners have to employ increasingly complex technology to extract a relatively small amount of Bitcoins.
Litecoin’s scrypt hashing algorithm makes it easier for miners to access the system.
This could cause a couple of things. First, it could encourage more novice miners to participate in the Litecoin system. This will help with widespread Litecoin usage since many users will be miners that never got a chance to mine Bitcoin.
Second, the simplicity of Litecoin mining could actually steal Bitcoin miners. It is true that Bitcoin is worth significantly more than Litecoin, but most Bitcoin mining is carried out by supercomputers. The algorithms have become too hard for everyday miners to crack.
This means that many miners tired of struggling over Bitcoin would transition over to Litecoin.
6. How to Invest
It is clear that Litecoin is going to be a powerful digital currency. Of course, it’s too early in the game to speculate on who will win the digital currency race.
In fact, there could be no winner. The future financial system could operate using dozens of digital currencies. And Litecoin is likely to be one of them.
Its days of riding on Bitcoin’s coattails are nearly over. The jump is coming.
We have already started to see this in the digital currency’s dramatic jumps this past month.
This means if you intend to buy Litecoin under $50 dollars, it is time to buy.
Luckily for investors, Litecoin is a fairly easy digital currency to purchase. Its popularity and appeal earned it a position on Coinbase, which remains the top digital currency exchange for novice investors.
The simplest way to buy is to go in and create an account. Once you have set up a username and password, you can plug in your banking information.
You can buy digital currency on Coinbase with a credit card, a bank account, or PayPal. This gives you complete freedom when it comes to purchasing the currency.
We wish you the best of luck in your investments.