TL;DR: “I’m announcing today that in 4 days, I will be cutting Litecoin mining rewards in half for the first time in 4 years,” creator Charlie Lee joked, mocking the Federal Reserve’s rate cut announcement. “This should help prevent the possibility of a cryptocurrency downturn.” Recently, Litecoin dropped from its #4 spot by market capitalization, down more than 18%, signaling all might not be well.
Litecoin Dropped More Than 18% Ahead of Halving
Halvings are prescheduled, as some cryptocurrencies reduce mining rewards periodically by half. They’re an anti-inflationary measure designed to up digital scarcity and thereby help with overall demand. In 2012, the first bitcoin halving event was linked to its price increasing by 10 times. For Litecoin (LTC), the formula worked famously back in 2015 when, at block 840,000 on August 25th, LTC’s mining reward went from 50 coins to 25.
The price then of LTC skyrocketed, and with it an economic theory was basically confirmed: the less total coin in circulation, the more valuable. The next LTC halving will happen at block 1,680,000, and at the time of publication LTC’s current block is 1,679,276, meaning 724 blocks remain before the reward of 25 LTC is reduced to roughly 12.5. The estimated time for the halving is right around August 5th, 2019.
A problem is developing, however, and it is difficult to know for sure if it’s related or just coincidence. By nearly every account, the price of LTC should be anticipating a nice runup, and even those who would call such a rise artificial are somewhat stymied. The opposite seems to be happening, as LTC is tanking. It’s doubly odd due to the price actually quadrupling this year — again, in what most thought was to be a reprise of 2015’s halving.
Another lingering issue might be LTC’s lack of development for nearly five years. Analysts are suggesting perhaps the market has matured during an extended bear run, valuing cryptocurrency projects who’re innovating and evolving. For his part, Lee himself more or less exited his financial position last year, posting how due to a perceived conflict of interest, “I have sold/donated all my LTC,” while vowing to “still spend all my time working on Litecoin” through its Foundation, presumably.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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