Litecoin declined today, falling to a more-than six-month low. The digital currency has been coping with numerous headwinds, including a broader decline in the markets.
Litecoin prices dropped today, extending their recent losses and falling to a six-month low.
The altcoin (cryptocurrency other than bitcoin) reached $54.50 today, according to CoinMarketCap.
At this point, the digital currency, which has frequently been called the silver to bitcoin’s gold, was trading at its lowest since March 12.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
“Litecoin has been under pressure since the halving of the block reward failed to boost price and it wasn’t helped by concerns surrounding funding for future development,” said Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital.
“The current price drop is simply the result of these fundamental issues and the fact that Litecoin closely follows Bitcoin,” he said.
When DiPasquale stated that litecoin “follows” bitcoin, he meant that the price of the two have frequently moved in tandem.
This relationship was explored in a CoinDesk analysis, which used CryptoCompare data.
Influence Of Bitcoin
Bitcoin’s price has suffered over the last few days, falling from more than $9,700 to less than $8,400 yesterday on CoinMarketCap.
The world’s most prominent cryptocurrency is in a “significant recent downtrend and pulled the majority of the altcoin market with it,” said Michael Conn, founder and managing partner of financial services firm Quail Creek Ventures.
He described this, along with the aforementioned challenges surrounding the halving and development, as “a perfect storm for Litecoin.”
While several analysts spoke to the difficulties facing the digital currency, Ilir Gashi, community manager of the Litecoin Foundation, emphasized that the altcoin’s price climbed more than 500% between December 2018 and June 2019.
As a result, the cryptocurrency is “currently retracting and pulling back,” he stated.
Further, litecoin’s “hashrate has remained relatively secure around ~310 TH/s which means that the mining pools are not that moved from the recent drops in price,” Gashi noted.
Akbar Thobhani, CEO and cofounder of cryptocurrency prime dealer SFOX, emphasized that the altcoin’s recent volatility may be a perfectly natural consequence of the halving that took place last month.
“‘Halvenings’ of any major cryptocurrency, historically, have correlated with increased volatility as traders are uncertain about the effect that the change in the rate of new coin supply will have on the coin’s price,” he stated.
“SFOX previously suggested that the Litecoin halvening could correspond with more LTC volatility, and we appear to be observing that trend.”
“As with any asset class, lasting value comes from fundamentals such as number of users and transactions, and these are the metrics to watch as Litecoin and other cryptocurrencies continue to grow.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.