An On-Chain Analysis of Litecoin
Litecoin (LTC) has had a strong 2019 so far despite being in June at peak levels of 142$ per token. Since the beginning of the year, Litecoin has increased its price reporting a YTD return of investment of 50%. The cryptocurrency has almost $3 Billion of market capitalization being number 6 on the ranking of most relevant crypto-assets.
Litecoin is a peer-to-peer currency, as well as an open-source software project released by Charlie Lee on Github back in 2011. The technical foundation of Litecoin is based on the Bitcoin Protocol and it enables instant, near-zero cost payments to anyone in the world. It uses a consensus algorithm designed to be quicker at processing transactions than Bitcoin. Also, LTC is faster than Bitcoin when it comes to producing blocks, as the network takes about 2.5 minutes for it, unlike Bitcoin´s 10 minutes time per block.
The Litecoin network leverages Scrypt as the cryptographic method in its proof-of-work algorithm, which determines the mining process for new coins. It is scheduled to produce 84 million litecoins and miners are currently rewarded with 25 new LTC per block. Litecoin undergoes halving events every four years. The next one will slash the reward from 25 to 12.5 LTC.
Litecoin was originally conceived for everyday transaction usage having merchants worldwide accepting payments with Litecoin. In this category, they have strong competition from leading crypto assets such as XRP, Stellar or Dash which has been growing steadily in the adoption of end-users.
As a leading crypto-asset, Litecoin has captured the attention of traders and analysts in the market but its behavior is far from understood. A look into the blockchain activity of Litecoin reveals some fascinating metrics about the behavior of this cryptocurrency.
What Blockchain Data Tells Us About Litecoin
Litecoin price movements are directly related to increasing usage of its network to reach its current price of $45.31 gaining the attention of many crypto investors and traders.
In terms of data analytics for Litecoin, the information highlighted by the IntoTheBlock platform is enlightening as it combines hundreds of factors to extract unique insights about the asset. Below you can see how currently the platform shows that there is an overall bearish sentiment for Litecoin:
- 80% of LTC holders would lose money if they decide to sell today.
IntoTheBlocks´s In-Out of the Money indicator reveals that 83.55% of Litecoin holders are currently underwater with their investments in this token. Therefore, it seems that there is plenty of barriers for LTC to reach its all-time high of $375.29. The same analysis shows that there are 66,000 addresses that bought Litecoin at an average price of $45.04. Since so many token holders are out of the money, we assume that price appreciation will have significant resistance from the existing Token Holders that will sell once par value is reached.
2. LTC HODLRs have been constantly increasing over time.
IntoTheBlocks´s holding period indicators show that the number of long-time holders / passive investors is increasing month to month. This can be seen as a vote of confidence in the viability of the project.
3. Litecoin is mostly traded outside Asia
Litecoin remains more popular within investors outside Asia based on metrics revealed by IntoTheBlock´s East-West analysis.
4. The Litecoin Network is very active.
IntoTheBlock´s address analysis shows that most of the addresses (over 63%) in the Litecoin network are active. These indicators process information directly from the blockchain to understand how the network is behaving in terms of its users. Regarding the growth, we can see that in the past three months the number of zero balance addresses (yellow line) is almost the same as the number of new addresses (blue line), therefore we can conclude that the network is not currently growing fast enough.
5. Positive Social Media trend
Over the past 7 days, IntoTheBlock’s News Key Topics analysis shows that LTC price is digesting the news related to the network in a negative way as we can see a downward trend in the graph.
These are some of the many revealing factors that jump off the page when analyzing Litecoin’s on-chain data. As Litecoin continues its evolution within the crypto market, some of these patterns will become more accentuated and new patterns will emerge.
Stay tuned for new updates about IntoTheBlock.
