Will Litecoin’s New Privacy Update Provide a Boost For Altcoin in Trouble?
Litecoin's highly anticipated privacy update took a significant step towards becoming a reality after the launch of its MimbleWimble test network. The limited trial version, which is currently accessible only to developers, is set for a mainnet release in 2021.
For investors, the move to increase Litecoin's privacy is an essential step in paving the way for really solid money and trades with confidence. But after a challenging 2020, could developments in the technology behind the cryptocurrency in trouble help it on the way to recapture its former glories?
Truly private transactions
MimbleWimble on Litecoin is an update that implements extension blocks for the Litecoin chain - allowing users to effectively mask their identities and trade with complete confidence.
Although it was announced in early 2019, the development of MimbleWimble did not begin until the arrival of David Burkett - Grin ++ developer - in December 2019. Subsequently, Burkett and the Litecoin Foundation successfully released the Github code for review and contribution by peers.
At the moment, testnet only comes with rudimentary features, such as mining and adding LTC nodes to testnet. For now, portfolio features will not be added.
While regulators have wary of privacy-centric cryptocurrencies as a significant threat due to their potential to promote money laundering, for many crypto enthusiasts the promise of true privacy and fungibility is essential to truly decentralized finance.
Litecoin has long been advocated for its practicality and the pace of transactions involving LTC. But could the arrival of truly private transactions drive the popular cryptocurrency upward, despite failing to live up to its optimism at the end of 2017?
Resuscitation for $365?
During the peak of late 2017, LTC reached an astronomical $365 figure. Today, it is a fraction of what it was before in a bearish crypto market, but the arrival of a long-awaited privacy update could be the shot in the arm. arm that the coin always wanted?
Litecoin's performance in recent months leaves little inspiration for investors, but in a market that is becoming increasingly dependent on external events to perform well, the move to a more private trading experience can help LTC to become a safe haven for adopters.
LTC was one of the first names to establish itself in the cryptocurrency market. Since then, it has become one of the largest currencies in the market based on its market capitalization. Today, Litecoin can be found on virtually all crypto exchanges, and with a Bitcoin to Litecoin exchange rate of 220.7 LTC to BTC, there may be some perceived value investment opportunities for traders.
Litecoin's appeal comes from the fact that it is one of the most widely accepted cryptocurrencies on the planet. This means that it is possible to purchase a wide range of goods and services via LTC and, at the same time, use Litecoin to invest in several other emerging crypto projects.
Litecoin was created in a way that was designed to mirror the world famous Bitcoin. However, one of the main attractions of the LTC is based on the scarcity of the currency. The currency is only produced at defined intervals after the approval of a transaction block for the network. As a result, there will only be 84 million Litecoins produced - thanks to a simple equation from the coin's developers.
The LTC developers have recognized that because Litecoin processes transitions four times faster than Bitcoin, it can accommodate four times tokens with such good performance. Notably, the limited supply of LTC ensures that it will never be adversely affected by inflation over time.
Of course, Litecoin is a robust cryptocurrency that has stood the test of time during a tumultuous decade in the history of cryptography. But could the currency recapture its $365 peak in 2017 as a more privacy-centric currency once again?
Well, Litecoin was touted as a fair bet to increase in value at the end of the year, as long as the LTC can break its current resistance pattern and start showing signs that it can surpass its current valuation by a maximum of $50. According to Invezz, if the LTC can exceed $50, there is no reason why it cannot reach $70 in the not too distant future.
Litecoin remains a powerful currency in the crypto market at a more technical level and comfortably outperforms Bitcoin in terms of faster payment processing, in addition to significantly lower transaction fees to make LTC a more practical currency than some of the most famous names that populate the cryptocurrency markets.
However, renowned cryptography analyst Michaël van de Poppe doubts that Litecoin will ever fulfill its market potential and reach its previous highs. Instead, he told Invezz that he expects cryptocurrency to end up falling among the top ten currencies based on market capitalization:
“Crypto markets are undergoing a series of transitions that will result in a jolt to previously dominant assets. The first transition would result in maturation and market regulation for Bitcoin and blockchain, while the second would cause the disposal of 'overvalued Top 10 currencies', including XRP, Litecoin and Bitcoin money,” he noted.
The arrival of more privacy for investors and traders when it comes to Litecoin is undoubtedly a step in the right direction for cryptocurrency. As a currency with highly practical features, it is fair to say that these developments can help restore the relevance of LTC. Although we may be a little far from seeing a sustained peak in a crypto market in trouble. One thing is certain, Litecoin has repeatedly proved that it is here to stay.
source: fxempire.com
As seen above, LTC carved out a long-term low at $1.12 in January 2015 and rose to a high of $8.72 in July before falling back below $4.00 ahead of Aug. 25 – a day when mining rewards fell from 50 LTC to 25 LTC.
So, it could be said that markets bought LTC in seven months prior to reward halving and booked profits a few weeks before the event.
The chart also shows that the cryptocurrency exited the bear market (long-term falling trendline) well before the reward halving.
Litecoin’s recent surge is reminiscent of the price action witnessed in early 2015. As noted earlier, the cryptocurrency has appreciated by more than 50 percent in the six-weeks and has crossed the 12-month-long falling trendline.
History seems to be repeating itself and so LTC could spend the next couple of months trading in a sideways manner before seeing a possible gear-shift in June and July.
Such a possibility is also pointed to in the price chart analysis.
Weekly chart
LTC closed last week at $46.30 on Bitstamp, confirming a bullish higher high and higher low pattern. The 5- and 10-week moving averages (MAs) are also trending north, having produced a bullish crossover in mid-January.
The move through the long-term trendline hurdle was backed by a jump in trading volumes to the highest level since February 2018. The bearish-to-bullish trend change, therefore, looks legitimate.
Bitcoin’s Halving History
Litecoin isn’t the only cryptocurrency to undergo a reward halving roughly every four years. In fact, so does the world’s largest cryptocurrency, bitcoin.
Since bitcoin’s inception 10 years ago, the cryptocurrency has experienced two reward halvings, the first on Nov. 28, 2012 and second on July 9, 2016, and is estimated to undergo a third in May of 2020.
As seen in the chart above, both halvings were preceded months in advance by significant price growth and full-fledged bull markets after the event.
Upon close inspection, it’s clear the halvings elicit a brief “sell the news” reaction from the market in the weeks leading up to the event. In that time, bitcoin witnessed price drops of 30-50 percent, which is comparable to litecoin markets in the few weeks leading up to its first halving.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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