- Litecoin (LTC) down 14.5 percent
- Halving will see prices drop and miners crashed
Charlie Lee is predicting doom. Because of August halving and a high possibility of low prices, many miners will shut down due to losses. In the meantime, LTC is down 14.5 percent.
Litecoin Price Analysis
Like any other network where consensus is via a proof-of-work algorithm, Litecoin is secure because of miners. Miners, according to many textbook definitions, have the sole purpose of confirming transactions and fortifying the network by committing their computational power.
Since gear is expensive and electricity is added expenditure, there must be a way of incentivizing the masses to participate. Within Litecoin and like Bitcoin, successful miners with superior gear committing the most of their computational power get 25 LTCs for every successful block.
However, in less than a month from now, that amount will be slashed by half to 12.5 LTCs. For the ordinary investor, LTC will likely surge. All the same, there is this realization that despite the optimism, supply-demand dynamics may have “priced-in” next month’s LTC value.
In that eventuality, bulls will likely falter. Worse, with dropping LTC prices and shrinking rewards, Charlie Lee, the Co-Founder of Litecoin, now says many miners may exit thanks to resulting scarcity shock:
“The halvening is always kind of a shock to the system. When the mining rewards get cut in half, some miners will not be profitable, and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For Litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust, and everything will be fine.”
At fourth, Litecoin is well-capitalized thanks to exemplary performance in the first half of the year. The rally from lows of $20 to over $120, Litecoin bulls were on a roll. However, like all near perpendicular expansions, the correction is often brutal.
Evident in LTC price action, the coin is down 14.5 percent in 24 hours and likely to lose more in coming days. From the chart, the drop below $100 is leading. Since LTC is within a bullish breakout pattern against the USD and currently retesting the main support trend line, any breach and close below $90 could trigger panic sells.
In a typical correction, odds are LTC will drop to $50 before recovering.
Therefore, from above June 27 candlestick is leading. As an extensive bear bar differentiating itself from others with high trading volumes of 824k, any close below the support trend line must be with equally high participation. Should LTC drop below $90 with a spike in participation confirming losses of June 27, prices may drop to $50 in a typical retest.
Chart courtesy of Trading View. Image Courtesy of Shutterstock