One of the best investments of 2022 that many have missed: our analysis of Litecoin price rise

Litecoin has steadily increased in price over the past three months, becoming the most profitable cryptocurrency out of the Top 10 over the past quarter. And this growth continues! Let’s figure out what’s going on in this article.

What’s going on with LTC?

Litecoin is a major altcoin that is consistently in the top 10 global cryptocurrencies (we should clarify that relatively recently CoinMarketCap began to include stablecoins, but if you count the top cryptocurrencies without stablecoins as it was before — then Litecoin is a consistent participant in the top 10 by capitalization).

Over the last quarter, Litecoin has been gradually rising in price; this steady upward movement started back during the crypto winter of November 2022. In January 2023 alone, Litecoin gained nearly 50%, with its market capitalization close to $7 billion. 

Recently, at its peak, the price of this asset set a record for the past year at $97, getting close to the important psychological barrier of $100 per coin. This steady growth of Litecoin is generating interest and many questions from investors, the coin has even appeared in the current Google Trends.

According to Messari, Litecoin has outperformed BTC and ETH in terms of return on investment (ROI) over the past three months (and even when looking at the annual period with some caveats). 

LTC’s ROI was 28.8% and 24.9% higher than that of investors in BTC and ETH, respectively (from October 2022 to present, these numbers are more than double the annual figure). LTC also outperformed DeFi tokens with an impressive 79% margin in 2022, amid a disruptive crypto winter.

Litecoin has outperformed BTC and ETH over the past 3M and 1Y timeframes (ie Risk on and Risk off environments).

Efficient markets ya'll. pic.twitter.com/fvESU3cxjG

— Tom Dunleavy (@dunleavy89) January 22, 2023

Another serious signal is the beginning of production of specialized miners — BIT Mining (aka Bee Computing) released an ASIC-miner for LTC mining. Investments in the production of such specialized hardware are very risky, and the attempt to release such a miner indicates that the demand for mining this coin (and hence the cryptocurrency itself) is estimated by the company as being steadily high. For specialists, the appearance of such products is a signal that something very interesting is happening.

Two growth patterns

Before we start analyzing reasons for LTC growth, let’s pay attention to different growth patterns in the crypto market. 

• Sometimes this growth is organic, which means that there is a fundamental reason for it and it is logically justified by future profit. 
• But there is also a paradoxical growth, based on rumors or irrational price rallies, the reasons for which are very difficult to find (and often show some hidden game of insiders or whales). As a rule, this pattern is typical for marketing-oriented and highly centralized blockchains, which tend to manipulate their markets and seek easy money. Recently we wrote about Aptos, whose growth at this point is also unexplainable (although we are not accusing the project of anything in particular).

Yes, it is possible to make money on both patterns with some skill. 

But there is an important difference: if the organic growth is more suitable for long-term and less risky investments (this type of investment is chosen by big players), then the paradoxical growth is a speculative game with high risk (which the so-called intraday traders prefer). It is very important to distinguish these two patterns in the market for better risk management of your assets.

NEWS: Bit Mining $ADR shares rally 42% after launching new Litecoin #LTC & Dogecoin #DOGE mining machine.

BREAKDOWN: Crypto miner demand slightly increased on higher token prices & the new Bit Mining machine is 'energy efficient'. pic.twitter.com/AODwNlVXHz

— Breakdown Report (@TheBreakdownRep) January 17, 2023

Three reasons for the growth of LTC

What is happening with Litecoin definitely belongs to the first type of growth — organic growth. Here, all the reasons are transparent and available for analysis. Let’s further list the most important events that happened in the Litecoin world (or are expected in the near future):

• Another hashrate record

Litecoin has a new hashrate record, indicating the growing health of the network. We wrote about that in detail right here:

At the end of January 2023, the Litecoin hashrate reached 778 Th/s, the highest value in the history of the LTC blockchain. The difficulty of mining also set a new record amid the activation of miners.

But here I propose to look at this technical parameter from an economic point of view, let’s try to explain what this means in terms of money. So miners are investing their money to increase the network’s power today, because they are sure that tomorrow the price of the coin will go up and they will be able to return this money with profits from mining. It turns out that such a strong increase in hashrate indicates a clear positive sentiment about the future of Litecoin, a massive and expensive bet on the further growth of the coin’s price.

• Coming Halving

Halving is a reduction in mining profits that will happen on this network soon — in August 2023. Historically, halving has always, without exception, led to a jump in the price of a coin; it’s a deflationary element of tokenomics on the PoW network. 

You can look at the statistical data of the price peaks on this chart above (the blue line marks the halving). As you can see, the price peak of the asset each time comes with a certain delay of 1-3 months after the halving. Based on this historical data, we can say that the current Litecoin rally will reach its next price peak in the fall of 2023.

• The successful implementation of the Mimblewimble

The integration of the Mimblewimble protocol in March 2022 is made possible in Litecoin Core v0.21.2 thanks to the Mimblewimble extension block (MWEB). This is a very advanced technology that allows Litecoin users to make confidential transactions on the blockchain, making LTC partly a privacy coin.

Although there is controversy about the assessment of this event (e.g., the authorities of some countries persecute privacy coins), personally, I think it is a giant technological step forward.

WSJ: “Wells Fargo, Bank of America, JPMorgan Chase, and four other banks are working on a new product that will allow shoppers to pay at merchants’ online checkout with a wallet that will be linked to their debit and credit cards.”

Litecoin is ready. https://t.co/EKezeYIL9I pic.twitter.com/1RQR4FZUmi

— Litecoin (@litecoin) January 24, 2023

Conclusion

As you can see, Litecoin is doing great. Apparently, the beautiful $100 mark for the coin is a matter of weeks away.

But the coin has one conventional drawback — it almost never spends money on its marketing, remaining a shadow project in the crypto market. The team has been quietly focusing on product development, showing excellent results. If Litecoin spent on its marketing at least a third of the amount that Solana spends on its promotion, it would be a very famous coin, but so far it is not surprising that many people do not know about the existence of this most profitable coin of the last quarter.