Litecoin Halving Countdown Supply Reduction and Price Fluctuation

Litecoin Halving Supply Reduction and Price Fluctuation

Author: BEN STRACK, blockworks Translator: Shanooba, LianGuai

Analysts say the historic price surge brought about by Litecoin’s halving has already occurred in this event.

Most people in the crypto community are aware that Bitcoin’s mining reward will be halved next year. However, few realize that Litecoin’s own halving will happen earlier than Bitcoin’s.

In Litecoin’s blockchain network, when a block is successfully mined, miners receive a certain amount of Litecoin (LTC) as a reward. This reward initially started at 50 LTC per block, but it halves approximately every four years, or every 840,000 LTC mined.

Currently, the mining reward per block is 12.5 LTC, but this reward will be halved to 6.25 LTC this Wednesday.

Litecoin has a supply limit of 84 million LTC, similar to Bitcoin’s supply limit of 21 million BTC. Currently, approximately 87% of Litecoin is in circulation.

Price trends keep changing

Matteo Greco, a research analyst at Fineqia International, told Blockworks that Litecoin experienced a growth of 824% in the months leading up to the halving in 2015, and 525% in 2019, reaching its peak seven weeks before the halving.

Greco said, “The next halving is expected to occur in less than 24 hours, and if history repeats itself, the 40% price surge displayed by LTC at the end of June could be the highest price reached in this medium term.”

According to CoinGecko, LTC reached $113 on July 3, the highest price since April 2022.

As of 3 PM Eastern Time on Tuesday, the price of Litecoin was $93.10, up 4.3% from a week ago and up approximately 0.5% in the past 24 hours.

Max Shannon, an analyst at CoinShares, told Blockworks, “Litecoin’s halving seems to be a ‘buy the rumor, sell the news’ event, with a significant price increase in the months leading up to it, followed by a reversal in price trend, indicating that the supply shock has been absorbed.”

Does it affect miners and other cryptocurrencies?

Greco states that as the Litecoin mining reward decreases, miners’ profits may be affected. However, when the hash rate drops, mining difficulty decreases, reducing mining costs and offsetting some of the impact.

Yang Youwei, Chief Economist at BIT Mining, points out that the impact on miners’ profitability may be further mitigated due to the dual mining mechanism of Litecoin and Dogecoin. He adds that while Litecoin’s block reward will be halved, Dogecoin’s block reward remains unchanged.

Grayco said, “Taking everything into consideration, halving will not have a significant impact on any component at this stage. It is more of a narrative used by investors and traders to create volatility and speculation.”

Yang said that although the overall volatility of the cryptocurrency market is currently low, compared to the previous halving, the price of LTC has not experienced significant fluctuations. He added, “Due to its relatively smaller scale compared to Bitcoin, and its unique nature and specific mining algorithm based on proof of work, Litecoin halving may not have a significant impact on Bitcoin or other altcoins.”

According to CoinWarz data, the hash rate of Litecoin is 786 tera hashes per second (TH/s), while Bitcoin’s hash rate is approximately 356 exa hashes per second (EH/s).

On Tuesday afternoon, the trading price of Bitcoin was around $29,130, a decrease of 0.2% from the previous day.