LTC has been falling since reaching a new all-time high price of $417 in May 2021. Initially, the price managed to bounce several times above the $135 horizontal support area. However, it finally broke down at the beginning of 2022, validating the area s resistance (red icons).
So far, the downward movement has led to a low of $40.2 on June 14, 2022. This amounted to a drop of 87% from the aforementioned high. The low was made at the $40 horizontal support area, which was last reached in March 2020.
On top of this, the weekly RSI has fallen to a new all-time low, a sign of an oversold asset.
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What is Litecoin?
Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities. Mathematics secures the network and empowers individuals to control their own finances. Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency. With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin.
The goal in launching Litecoin was to improve on Bitcoin in a few different ways. For one, Lee developed a new hashing algorithm for Litecoin called Scrypt (pronounced S-crypt). The simpler algorithm supported Litecoin’s faster transaction speeds. Bitcoin has a slow transaction processing speed of roughly five transactions per second. Generating new blocks on the Bitcoin blockchain can take about 10 minutes.
This slow transaction speed frustrates merchants who want to accept Bitcoin as payment. You can wait up to an hour, on average, for the six confirmations required for a Bitcoin transaction. Imagine buying something online using a credit card and being on that “your transaction is processing” screen for an entire hour.
Litecoin’s transaction processing speed, on the other hand, is 54 per second—and new blocks on the Litecoin blockchain can be created about every 2.5 minutes. While Litecoin still requires a minimum of six confirmations from most exchanges to be considered irreversible, peer-to-peer (P2P) crypto payment networks can often settle Litecoin transactions almost immediately.
The improved transaction speed was meant to prove to merchants that they no longer had to be frustrated by Bitcoin’s long settlement time. Instead, they could accept Litecoin and settle payments faster and, therefore, conduct business more quickly and at speeds more on par with other digital payment methods.
Short-term Resistance Line
The six-hour chart shows that LTC has been falling underneath a descending resistance line since the beginning of April. More recently, the line caused a rejection on May 5.
While the price has been increasing since June 14, it has failed to reclaim the $55 minor resistance area, which now coincides with the aforementioned resistance line. Additionally, the RSI is right at the 50 line, providing a sign of a neutral trend.
So, the six-hour chart provides a somewhat neutral outlook, failing to indicate whether a breakout or rejection will occur.
LTC/BTC
Cryptocurrency trader @traderrocko tweeted that the LTC/BTC chart has increased by 40% since its June lows.
The LTC/BTC chart is more bullish than its USD counterpart. The price has increased significantly since June 14 and broke out from a descending resistance line on June 20.
The closest resistance is at ₿0.00285. This is a crucial level since it has intermittently acted as both support and resistance since the beginning of the year. A movement above it could further accelerate the rate of increase.
How Is Litecoin Used?
Litecoin is highly liquid, which makes it a crypto for easier trades. In fact, Litecoin holders will find that merchants such as Newegg, SlingTV and even nonprofits like the American Red Cross are happy to accept their cryptocurrency.
You can also use digital currency apps like BitPay or CryptoPay to make a payment using LTC. If you want to use LTC for P2P payments, you can use the Binance app to pay someone with LTC.
Litecoin Advantages
From the get-go, without any additional tech layers added on top of the Litecoin blockchain, it’s a faster cryptocurrency to transact than Bitcoin, and it does so more cheaply.
At the time of this writing, Bitcoin transaction fees were significantly higher, at around 3.92% on average, compared with Litecoin’s transaction fees of roughly 0.06%.
Litecoin Disadvantages
In 2017, Litecoin creator Charles Lee divested himself of most of his Litecoin holdings, citing a “conflict of interest,” and Lee’s action caused some loss of faith in the crypto.
“Something that caught the investor’s eye and had an impact on the investor’s confidence is that in 2017, Charles Lee, Litecoin’s founder, has sold his stake in Litecoin,” says Claudiu Minea, CEO and co-founder of SeedOn, a blockchain-based crowdfunding platform.
While designed to have a faster TPS than Bitcoin, Carlos González Campo, research analyst at 21Shares, says, “Layer-2 solutions on top of Bitcoin like the Lightning Network” have both sped up Bitcoin transactions and potentially diminished the need for Litecoin’s use case as a faster payment network.
There are also newer cryptocurrencies with faster TPS speeds. These include EOS at 4,000 TPS, XRP at 1,500 TPS and Cardano at 257 TPS, to name just a few.
Should You Buy Litecoin?
While Litecoin remains one of the most-traded cryptocurrencies, does it make for a sound crypto investment?
Blaskey of BitIRA says that Litecoin might be a fit for a seasoned cryptocurrency investor’s portfolio who appreciate its staying value and flexibility—especially those who “want a combination store-of-value asset with the side benefit of convenient transactions.”
Litecoin could be a decent place to place a small stake to get used to the “ins and outs” of crypto trading for the newer crypto investor, some experts say.
On whether LTC is a good choice for your wallet, Minea surmises, “There are other blockchain competitors that people can choose from, however, Litecoin still remains a relevant choice.”
Before you invest in Litecoin, learn how to buy Litecoin and read up on cryptocurrency wallets. Speak with a financial advisor about how much you could realistically invest in cryptocurrency based on your unique financial goals.