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Do Halvings Have The Same Effect On Bitcoin And Litecoin?

ยท in Breaking, Crypto News
Carlos is an international relations' analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.

There are two large cryptocurrencies that experience a halving event every four years, Bitcoin (BTC) and Litecoin (LTC). These two digital currencies are very similar and their communities tend to be friendly to each other. However, it seems that halving events have a different impact on the price of these two digital assets. This is according to the cryptocurrency analyst @100trillionUSD – also known as PlanB. 

Bitcoin and Litecoin Halvings

Every four years, Litecoin and Bitcoin experience a halving event. These halvings reduce the number of digital assets received by miners by 50%. Reducing the new issuance of coins every four years is something that should be considered bullish for these digital assets. This is because there will be fewer coins available for a larger number of investors if demand grows. 

However, following the stock-to-flow ratio, Litecoin’s price doesn’t have a strong relationship with halvings. As explained by PlanB, people think that because Litecoin didn’t experience a price increase when it halved, Bitcoin could experience a similar behaviour. 

About it, he explained:

“Some people think that because litecoin didn’t jump on ltc halving, btc halving will also be irrelevant for #bitcoin. That logic is flawed. LTC price doesn’t have a significant relationship with stock to flow, so halvings are indeed irrelevant. BTC price-s2f relation is strong.”

https://twitter.com/100trillionUSD/status/1167748861311541248

He went on saying that the does not know why Litecoin’s price doesn’t have a relationship with stock-to-flow. One of the reasons could be related to the fact that it has fewer network effects, including developers, on/off ramps, futures/options, liquidity, and so on. 

One of the Twitter users said that the Litecoin halving was already priced in when it happened. Indeed, Litecoin moved from $23 in December 2018 to over $140 a few months later. However, PlanB explained that this move is not statistically significant and that this could be related to a narrative rather than about data. 

Litecoin halved almost a month ago and LTC miners are now receiving 50% fewer LTC per block discovered. Indeed, they are receiving 12.5 LTC per block compared to 25 LTC per block before the halving. Despite this decrease in the new issuance of Litecoin, its price didn’t behave positively. Indeed, in terms of BTC, Litecoin fell to its lowest point since December 2017 when Bitcoin was skyrocketing. Litecoin has also dropped 55% since June this year from $143 to $64 a few hours ago. 

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