Nothing Fundamental About Litecoin 'Halving Event'

LTC mining block size decreased from 25 to 12.5
Halving thought to be positive as it brings more attention to the coin
LTC outperformed in 2019 and in the few days ahead of the event
Crytpo and Bitcoin Futures Story of Day

Crytpo and Bitcoin Futures Story of Day

CRYPTO MOVERS AND PRICES

 

 

CRYPTO STORY OF THE DAY

Litecoin (LTC) Underwent A Block Mining Reward Halving Event Yesterday - We Wanted To Clarify Our Comments Made Friday - There Is Nothing Fundamental About A 'Halving Event,' However, Due To Altering Trading Dynamics, They Can Have Near-Term Implications For Price

The LTC mining block size decreased from 25 to 12.5. Litecoin's block reward halves every 840,000 blocks or roughly every four years. LTC has outperformed in 2019 and in the few days ahead of the event but has underperformed post and slipped from the 4th to 5th largest crypto by market cap.

Takeaway: If prices were efficient and reflective of fundamentals, block reward halving would not have any notable impact on price. The timing of the event is known years ahead and its occurrence provides no new fundamental information. That said, many have theorized that such events do have a near-term impact on price. This, due to increased attention on the coin and dynamics impacting miners on both the trading (lower reward = less LTC for sale from miners) and operational mining side (lower reward = repurposing of hardware to other blockchains). We've noted previously that we find the most appropriate analogy in traditional finance to be corporate share repurchases. Where, from a fundamental standpoint, a share repurchase is simply a balance sheet adjustment. However, due to the constant presence of a buyer in the market, buybacks have still been observed to support the share price in the near-term.

About the Author

FRNT Financial is an Institutional Brokerage which offers clients a variety of products along with research & analytics in the crypto-space.