Litecoin, still leading the market higher
Litecoin led the cryptocurrency market rebound earlier this year and it looks like it is going to lead the second leg of the rally too. The price of LTC versus the dollar has spiked more than 12% in the last 24 hours and confirmed a key support. Support is at the short-term moving average and looks strong in light of the up trend.
The next key technical level is the $107.50 level, the most recent high, and what may become resistance. A move above $107.50 will be very bullish and likely lead the token even higher. Once the $107.50 level is broken the next targets will be $175 and $250. The indicators are bullish and confirm today’s bounce. This adds additional upward pressure to momentum and increases the likelihood prices will break out.
So, what could be driving such a strong move in LTC? In all probability it is the upcoming halving. Scheduled to happen in about two months the halving is going to seriously reduce the amount of available LTC’s. The halving is a naturally scheduled event. It happens every 840,000 blocks and intended to accomplish a number of purposes. One is to reduce the amount of LTC inflation. LTC inflation, the devaluation of the token long-term associated with over-mining, now stands just over 8.0%. Another purpose of the halving is to ensure a long-life for the network.
At the next halving the LTC reward for mining a block will be cut in half. The current rate is 25 new LTC’s for every block mined, the new rate will be 12.5 LTC’s. Considering that about 75% of all LTCs have been mined this is a good thing. At current rates about 14,400 LTC’s are mined each day, after the halving there will be about 7,200 new LTCs each day.
Anticipation for the halving and the run up in prices associated with such events has led to an increase in mining difficulty. The hash rate for LTC has been steadily creeping up since the beginning of the year and is now at a new all-time high. This fact is putting additional upward pressure on LTC prices because it takes longer and costs more to mine a new LTC.
The bottom line is simple. LTC is a digital commodity facing a supply challenge. Not only is the number of LTC up for grabs going to decrease the difficulty in find them is going up. This is resulting in a serious supply imbalance and that is what we are seeing in the market. Once prices regain the upper side of $107.50 and I think it will be soon, I think LTC prices will continue to surge.