A rule built into the code of the cryptocurrency will ensure that on this day the reward for miners, who ensure the processing of transactions, is reduced by half.
While miners are currently receiving 25 LTC ($ 2,500) per block, their reward will then be reduced to 12.5 LTC ($ 1,200) per mined block.
This Is Why the LTC Price Should Rise
The community has to wait for only four more days for the Litecoin halving to happen.
The main objective of the event is to preserve the purchasing power of the 4th biggest blockchain as much fewer Litecoins will be mined. Basically, the halving is a measure similar to an increased interest rate by the central bank to combat inflation.
As LTC becomes much scarcer, investing in the cryptocurrency should become more interesting for investors as well. No wonder then that the community assumes that the Litecoin halving will increase the LTC price.
Is the Litecoin Halving Already Priced In?
If you take a look at the last 6 months, you will quickly notice that the Litecoin price has already risen sharply in 2019. It is therefore quite likely that the expected increase in LTC’s value has already been priced in.
At the beginning of the year, 1 Litecoin was traded for $ 30. By the end of the first quarter, the LTC price had already risen to $ 61 and was up 100%.
This is also noteworthy, because it’s Litecoin’s best 3-month performance to date. In addition, the price increase is all the more remarkable, considering that Bitcoin was still in the bear market at the time. After all, long before Bitcoin broke through its $ 4,236 resistance on April 2, Litecoin had already ushered in the bull market.
The remaining metrics also developed very positively during the first half of the year. For example, the Litecoin hashrate (the computing power used for mining) increased by 258% between December 2018 and July 2019.
However, after the initial hype and a staggering $ 140 per Litecoin, the LTC price fell back to $ 80 the following month.
This Happened During the Last Litecoin Halving
Contrary to what some may believe, the recent price crash to up to $ 80 is not all that surprising. At least not for those who compared the development with the last Litecoin halving in August 2015.
In the months leading up to the 2015 event, the LTC price initially rose sharply.
While 1 Litecoin was valued at $ 1.12 in January 2015, in July of the same year the price shot up to its all-time high of $ 8.72 at the time and then eventually dropping back down to $ 2.33 by the 25th. After that, the LTC price moved largely sideways for long periods stagnating between $ 2.50 and $ 5.50.
The next big increase only started happening in April 2017.
What the Future Looks like for the LTC Price
The same development could also repeat for the second Litecoin halving. If the Bitcoin price continues to hover at around $ 10,000, Litecoin could move sideways after the new halving as well.
With the mining rewards halving on the 5th of August, it is also likely that some miners will migrate to other blockchains, which will reduce LTC’s hashrate. A development that was also observed during the last halving. (Back then, the computing power initially had fallen by 15% in the weeks around the halving event.)
However, the annual inflation rate falling from 8.4% to 4% will have a very positive effect on the LTC price. This means that the declining mining profitability will likely be compensated in the long term and hashrates will also recover. A process that, according to Binance, took just two weeks after the last halving in 2015.
Our Conclusion for Investors
Although the LTC price has created a lot of hype in the first half of the year and ushered in the bull market, the community has calmed down a bit in the meantime.
This is likely because no one expects Litecoin to jump up sharply in the medium-term.
Investors who plan to hodl, however, should be able to make good profits with Litecoin in the long term.