Everybody is talking about how the anticipation of Litecoin’s imminent halving is pushing the prices up. However, the important question is, “How will Litecoin prices perform post-halving?” This is one question no one seems to be interested in addressing.
In a new CoinMetrics report, everything about Litecoin, including the price action after the halving is addressed. Bitcoin and Litecoin’s prices always rise before the halving, thanks to anticipation combined with the increasing scarcity of coins post-halving. The report expanded on how it acts as a catalyst, affecting both miners and market participants. It read,
“Although the short history and infrequent block reward reductions prevent us from drawing strong conclusions, the limited track record of a block reward reduction’s impact on prices (principally for Bitcoin) is quite strong. Because of this, an upcoming block reward reduction is often cited as a reason to be bullish about an asset’s future price appreciation”
Litecoin has already been testing this theory and has proved to be adhering to it, so far. The report added that the price of LTC will usually go higher due to bids by market participants who know that the miner-led selling pressure is usually reduced after the halving.
Dwelling deeper into the mindset of miners, the report said,
“In 2018 alone, Litecoin miner revenue totaled nearly 5.3 million native units, equivalent to $561 million in U.S. dollars.”
However, since the miner selling pressure after halving is low, market participants hedging for the price to rise before the halving would point towards increased buying pressure. Hence, increased prices post-halving are expected.
The report added,
“Even if market participants rightly anticipate the impact of block reward halvings months in advance, once the halving actually occurs, the reduced selling pressure can lead to continued increases in prices post-halving.”