Digital Silver. What will happen to the price of Litecoin after the rapid growth?

Digital Silver. What will happen to the price of Litecoin after the rapid growth?

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Author: Robert Strickland (crypto-journalist)
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"Digital Silver. What will happen to the price of Litecoin after the rapid growth?
Experts named the factors influencing the rising rate of the cryptocurrency, and told what marks its price may reach in the future


The cryptocurrency Litecoin (LTC) has gone up by 20 percent since the beginning of May, and it was affected by several factors. Bitcoin's sharp rise in fees forced users to look for cheaper alternatives for payments, and against this background, the number of the coin's transfers reached record highs.

Litecoin is the second oldest existing cryptocurrency, originally created as a slightly modified copy (fork) of bitcoin by developer Charlie Lee. Like bitcoin, Litecoin runs on the Proof-of-Work (PoW) algorithm, in which verification of transactions in the blockchain is maintained by miners in exchange for rewards in the form of new coins. Each new transaction block is added to the Litecoin blockchain every 2.5 minutes on average, compared to 10 minutes for bitcoin.


After the excitement around trading tokens of the new BRC-20 standard triggered a big jump in commissions and transaction confirmation delays for bitcoin, Litecoin has become more attractive to both average users and traders. At the time of publication, LTC is trading at $91.5 and the coin has a market capitalization of about $6.7 billion, making it the 11th largest cryptocurrency in the CoinMarketCap ranking.

LTC/USD
90,99 -1,63 (-1,76%)

LTC/USD : 88.289 Tuesday, May 2
The coin was also supported by those who invested in it before the event known as halving when the rewards received by miners are reduced in order to limit the supply of coins. Litecoin halving is expected to occur in late July or early August. Halving also occurs in bitcoin and other cryptocurrencies that use its code as the basis for their own, such as Zcash (ZEC).

The approach of halving has become the main growth driver for LTC, explains Exmo.me exchange CEO Vladimir Cherpichnikov. In addition, not so long ago Litecoin held the first transaction through the Lightning Network protocol. The Lightning Network integration has increased the scalability of the coin's blockchain at least ten times.

Lightning Network is a payment protocol originally created for bitcoin, but also deployed in some other Proof-of-Work cryptocurrencies, including Litecoin. It allows instant transactions between wallets and services that technically support it, and is offered as one of the most prominent solutions to the cryptocurrency's scalability problem.

"From a fundamental point of view, the coin is pleasing: it is clear that the project is developing and is not going to stagnate or degrade like many other altcoins," notes Cherpichnikov.

The current round of growth is largely due to the appearance of tokens of standard LTC-20 on Litecoin blockchain, which are similar to Bitcoin's BRC-20, adds co-founder of ENCRY Foundation Roman Nekrasov. Investors expect LTC-20 to have the same wave of popularity growth as BRC-20, and following the influx of liquidity into tokens will increase activity and demand for LTC itself. "The fact that this forecast is real can be seen from the statistics of processed transactions - their daily number has reached an absolute maximum," Nekrasov specifies.


Another factor of LTC price growth, according to his observations, was the use of the coin as an analog of bitcoin for transfers against the growth of fees in the blockchain of the latter. A similar thing was already happening in 2017, when users preferred to use other coins for transfers due to a sharp increase in transaction fees in the bitcoin network. "At that time, many bought litecoins and deposited them into accounts at cryptocurrency exchanges, where they immediately exchanged them into BTC and then traded bitcoin," recalls Nekrasov. - That is, it was a tool for fast and cheap transactions.

Litecoin proved to be a reliable cryptocurrency that "has survived more than one recession and cryptowinter," Nekrasov argues. It is architecturally similar to bitcoin, has a high level of decentralization, is profitable for miners, provides fast and cheap transactions and generally shows low volatility compared to other altcoins. These "ingenuous qualities" will be appreciated by participants of the crypto market for a long time to come, the expert believes.

"Bitcoin is called 'digital gold' and Litecoin is called 'digital silver,'" adds Cherpichnikov. - By and large, it's just an improved version of bitcoin with higher transaction speeds and lower fees. Litecoin represents "old school" and is rightfully at the top. The coin will be able to stay relevant for the same reason that bitcoin will keep it. It will be great for both short-term trading and investment."

 

What will happen to the price?
After halving Litecoin may grow 1.5-2 times on the horizon of three months, Nekrasov predicts. If the entire cryptocurrency market goes up against the backdrop of bitcoin halving, LTC "will easily grow in price three times the current level," the expert believes.

In terms of technical analysis, the coin has found its support level and rebounded from it, Cherpichnikov analyzes the technical picture of LTC price movement. Other indicators show the activity of short-term traders. The coin was able to pass the 200 MA (Moving average, moving average. - "RBC-Crypto") level again and consolidate above it.

Historically, Litecoin is the first to enter the bull market, the expert notes. For this reason, LTC started rising before bitcoin and other crypto-assets in November 2022 after the fall of the crypto market. In the short term, he believes we should expect a local pullback, as the coin has been rising in price for five consecutive days.

"A sensible correction would be a stop in the $87.50-90 zone. The price "needs to have a rest before a serious movement". According to the expert's observations, there is rather strong resistance at the level of $100. In the mid-term the asset may pass this level and the price of the coin will go to the zone of $120-130. The main thing, in this case, is to consolidate above $100.

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