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Litecoin price prediction: does halving lead to price pump?

Sanmi Adeagbo | Aug. 1, 2019
Litecoin price prediction: does halving lead to price pump?

Litecoin returns bullish ahead of the halving coming up on August 5. Will LTC react bullishly?

August 01, 2019 | AtoZ Markets - At the time of writing, the much anticipated Litecoin halving is just 3 days and 17 hours to go according to this time counter. Ahead of this event, Litecoin is coming back bullish after going all-bearish in July. Despite the July dip, Litecoin still maintains a huge net price growth since it bottomed in December 2018. Here we are in August - the halving month, and it will be interesting to see how LTC reacts. At the time of writing, Litecoin trades at $98. After the massive 2019 rally to $146, the price dipped to $75 in July. Meanwhile, it's picking up gradually after a short dip to $83. 

'Halving': what is it about?

Halving is a process developed to cut down the amount of a cryptocurrency mined into the crypto space. The aim of this process is to preserve the purchasing power of the digital asset in question. Halving works by cutting down the mining reward by half. The current reward of 25 LTC per block will be reduced to 12.5 Litecoins on August 5 when the process completes. At the end of the exercise, the amount of Litecoin mined to the market will reduce significantly.

Normally, with a lower supply comes a bigger demand and a higher price. However, in this scenario, the supply cut might have already been priced in. Litecoin is among the higher gainers this year. In the first three weeks of June alone, LTC price gained close to 50% before it dropped fast in the last week and continued the bearish run in July. 

Will halving lead to LTC surge?

Basic economics could sway one's mind to believing halving causes a cryptocurrency to gain significantly. However, according to a recent report from Strix Leviathan, an algorithmic investment management platform, there is no direct relationship between halving and price pump. Leviathan found ''no evidence that cryptocurrency assets experiencing a halving event outperform the broader market in the months leading up to and following a reduction in miner rewards''. This is not limited to price pump according to them. The platform also found out that a cryptocurrency's return distribution before and after a halving event is the same as the rest of its return distribution. Therefore, according to the research, halving does not practically affect a digital asset's price activities during and after a halving process. Perhaps the pricing-in has been done weeks or a few months before the event or the market does not just react to it. 

Litecoin price prediction: Elliott wave analysis

In the last update, we noted that the dip from the $146 top to $75 completed a zigzag pattern. Whether that is enough before the bullish trend resumes or price will go further downside to complete a more complex corrective pattern remains to be seen. Meanwhile, a break above the $105 should see a further rally to $120 at least. 

Preferably, we should expect the bullish trend to continue if the price breaks above $105 quickly. The broader market sentiment suggests the bullish trend could continue soon. A similar pattern is seen in the Bitcoin chart. If the crypto market spikes upside and LTCs hit the $147 top, the halving might not be the cause after all. 

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.