Litecoin's Halving Is Months Away, But Traders May Already Be Pricing It In

Published on by Coindesk | Published on

Litecoin has rallied sharply in the first six weeks of 2019, triggering speculation that investors may be pricing in a supply reduction that's scheduled to occur in August.

LTC picked up a bid near $20 in December, tracking the corrective rally in bitcoin - the world's largest cryptocurrency by market capitalization.

Things changed last week, with LTC outshining BTC's 7 percent gain with a 41 percent rise.

LTC's strong performance comes at least five months ahead of the mining reward halving, or the time at which the amount of litecoins produced as a network subsidy for each transaction block falls is cut in half.

On Aug. 8, the mining reward will be reduced from 25 LTC to 12.5 LTC. Markets are always forward-looking and hence could be pricing in the impending supply drop.

Litecoin's performance in 2014-2015 and 2018-2019As seen above, LTC carved out a long-term low at $1.12 in January 2015 and rose to a high of $8.72 in July before falling back below $4.00 ahead of Aug. 25 - a day when mining rewards fell from 50 LTC to 25 LTC. So, it could be said that markets bought LTC in seven months prior to reward halving and booked profits a few weeks before the event.

History seems to be repeating itself and so LTC could spend the next couple of months trading in a sideways manner before seeing a possible gear-shift in June and July.

LTC closed last week at $46.30 on Bitstamp, confirming a bullish higher high and higher low pattern.

Litecoin isn't the only cryptocurrency to undergo a reward halving roughly every four years.

As seen in the chart above, both halvings were preceded months in advance by significant price growth and full-fledged bull markets after the event.

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