- The full influence of Litecoin’s August halving still unknown
- What influences price surge after Halving
Regardless of the speculations that the 2019 block reward halving will reduce its price, Litecoin has managed to stay stable. According to the latest Coin Metrics research, it might take another year before we see the full effect the halving had on the market. With Bitcoin’s May 2020 halving gradually approaching, the possible influences of the 50% reduction in block rewards are quite important in the crypto sphere. Going by the recent coin metrics research, the small amount of block rewards the industry has seen ad their “infrequent nature” made making any strong forecast almost difficult.
However, Kevin Lu and the Coin Metrics team used Litecoin’s August halving to assess two of the most popular block reward halving theories. The first theory states thus: block reward has little influence on the coin’s price as they are already priced in. this is because halvings are always required by the protocol, and are known to all market users.
Thus, since everybody is aware of the halvings, the efficient market hypothesis (EMH) explains that its possible outcomes are seen in the coin’s price. That is why there is no instant reaction in the price of a coin immediately after the halving.
So far, Litecoin performance all through 2019 backs up this theory. The market expected the halving and bid LTC’s price in advance to lessen the instant influence on its price. LTC surge 350% in the first six months of 2019, probably due to this occurrence, beating other cryptocurrencies except for Binance Coin (BNB). The coin’s poor performance in the second half of the year could be explained by traders undoing their stance
What Influences Price Surge After Halving
Several analysts have opined that Bitcoin’s halving will thrust its price upwards often refer to the reduction in miner-led selling pressure that occurs following the halving. As miners symbolize the single largest unit of natural, reliable sellers, miner-led selling pressure should have a major influence on a cryptocurrency’s price.
The Coin Metrics report used Litecoin to elucidate the example. Stating, as Litecoin’s annualized supply issuance was running at 8% before the halving. This means that at current prices, miner’s revenue was approximately $200 million yearly. This is about $600,000 of all their rewards for fiat to cover the cost. After the August halving, Litecoin’s annualized supply issuance was reduced to 4%, which means that the daily selling pressure was about $300,000. “Such a drastic reduction in compelled selling pressure should be supportive to prices going forward,” the report explained.
Litecoin (LTC) Price Today – LTC / USD
With Bitcoin, Bitcoin Cash, Bitcoin Cash SV, and ZCash all slated to experience a block reward halving next year, it might take another year or more before the market sees the true influence of Litecoin’s halving.