According to Coinmarketcap.com, with a market value of $10.7 billion, Litecoin (CCC: LTC-USD) is the 15th biggest cryptocurrency. It’s also one among the earliest blockchain-based currencies, having appeared shortly after Bitcoin (CCC: BTC-USD). As a result, if Bitcoin begins to rebound, Litecoin crypto is likely to increase alongside it.
LTC tokens have increased by around 26% so far this year (YTD). Last year, it closed at $126.23 on December 31st, and it was at $159.82 on September 22nd. Furthermore, on May 8, the cryptocurrency reached a high of $386.45, representing a YTD gain of 206 percent.
On the other hand, most investors should have gotten out at that point. That’s because Litecoin’s value plummeted over the next several months, eventually settling at $107.40 per LTC currency on July 19. However, the cryptocurrency has risen 48.8% to $159.82 since then.
Bitcoin’s Connection
Surprisingly, Bitcoin has followed a similar trend this year. BTC reached a high of $63,503 on April 12th, up 116 percent. Then, on July 19, it plummeted to a low of $29,807 (as with Litecoin). Since then, Bitcoin has risen over 46% to $44,600 on September 23.
When Bitcoin rises, so do a number of “legacy” cryptos like Litecoin, according to a Cointelegraph article. Litecoin is a cryptocurrency that they patterned after Bitcoin and moves in lockstep with it.
Despite certain variations between Litecoin and Bitcoin. The primary difference is that Litecoin has a substantially larger token supply. Unlike Bitcoin, which has a supply limit of 21 million tokens, Litecoin has a supply limit of 84 million.
The reason for this is that Litecoin’s creator, Charlie Lee, sought to present the cryptocurrency as a “silver” alternative to Bitcoin’s “gold.” In a recent piece, they cite him as saying that he wants the cryptocurrency to be a “lite” version of Bitcoin.One method to accomplish this was to significantly expand its supply.
As a result, Litecoin has had a similar link to large Bitcoin market movements. Apart from Bitcoin, Litecoin has seen several significant changes. Here’s an example.
Media Coverage About Litecoin
Walmart (NYSE: WMT) announced on Sept. 13 that it will accept Litecoin as a payment mechanism, which surprised Litecoin investors. According to Decrypt online magazine, the value of LTC quickly increased by 34%. Why not, after all? Other than Tesla’s (NASDAQ: TSLA) on-again, off-again adoption of Bitcoin as a payment mechanism, that would have been the first significant corporation to make a statement.
The only issue is that the announcement provided false information. Later in the day, Walmart issued a statement claiming that the press release was not genuine.
Nonetheless, one positive outcome of this drama is that it demonstrates that they still see Litecoin as a viable payment option by the general population. PayPal’s (NASDAQ: PYPL) UK users will soon be able to purchase and sell four main cryptocurrencies. Litecoin was one of the four coins. Bitcoin, Bitcoin Cash (CCC: BCH-USD), and Ethereum were the other three (CCC: ETH-USD).
What’s the harm? Except for Tesla’s (NASDAQ: TSLA) on-again, off-again adoption of Bitcoin as a payment mechanism, it would have been the first large corporation statement.
However, it also demonstrates how well-established Litecoin’s relationship is with Bitcoin. You can generally dismiss any report claiming it is being accepted entirely (aside from Bitcoin) as a payment option as bogus news.
The Impact on Investors
In the Defi and Dapp sectors, Litecoin is quietly gaining traction. Decentralized finance is abbreviated as Defi, while decentralized applications is abbreviated as Dapp. In my most recent piece on Litecoin, I discussed this.
For most investors, the fact that Litecoin has a strong association with Bitcoin means that LTC is a less expensive alternative to get identical results. The truth remains that a single LTC token costs around $160, whereas a single BTC costs a whopping $44,000.
Given the four-fold supply disparity, Litecoin’s price should gradually trend toward $10,866 (i.e., $43,465/4), assuming it finally reaches parity with Bitcoin. However, because Litecoin is not as well-known, we must heavily disregard it.
As a result, even if we discount Litecoin’s comp value with Bitcoin by two-thirds, it should still be worth $3,622 (i.e., $10,866 x (1-.6666)). For LTC coins, this is a potential upside of 22 times.
Let’s suppose it takes five years to do this. For the following five years, investors expect the compound average growth rate (CAGR) to be 86.6 percent yearly. For most people, that is a reasonable annual return on investment.
Mark R. Hake had a long position in Bitcoin and Ethereum at the time of publishing, but no other securities mentioned in the article. The writer’s views are his or her own, and they are subject to the InvestorPlace.com Publishing Guidelines.
