Why Is Litecoin So Cheap?
Find out why Litecoin is extremely undervalued
While other cryptocurrencies were trying to stray away from the path that Bitcoin had carved, Litecoin and a few others decided to follow Bitcoin’s footsteps. As a result, it is commonly referred to as digital silver. Having been closely inspired by Bitcoin, Litecoin shares many attributes with the first-ever cryptocurrency.
It is one of the oldest cryptos in the market and has always been in the top ten by market cap. However, although Litecoin mostly replicated Bitcoin’s technology, it wasn’t entirely able to replicate its success. Most people keep wondering why Litecoin is still so cheap, yet it has been in the market for long enough.
In this guide, we try to explain why Litecoin’s price has remained relatively low over the years despite taking after the most successful cryptocurrency in the world. To do this, we will need to look at Litecoin’s price history to understand where it has come and why it has struggled along the way.
Crypto experts predict that the price of Litecoin will likely rise again at some point in the future. But before you conclude from this historical deduction, there is more to why LTC is considered cheap at its current market price.
Economic experts understand these trends and advise people accordingly. This is why the price of Litecoin is considered so cheap at this time.
Before that, let’s first understand what exactly Litecoin is?
What is Litecoin (LTC)?
Litecoin is an open-source, peer-to-peer cryptocurrency project that is mostly underpinned by Bitcoin’s original technology. It was among the first-ever cryptocurrencies and is now ranked as the 5th largest in the world by market capitalization.
The coin was created by former Coinbase and Google engineer Charlie Lee and is now maintained by the Litecoin Foundation. Litecoin uses almost a replica of Bitcoin’s blockchain and has several things in common.
For instance, they are both powered by a proof-of-work consensus and can be mined. However, there are about four times the amount of LTC in supply compared to Bitcoin. That is about 84 million LTC against 21 million BTC.
The altcoin also has a lower transaction verification time of 2.5 minutes compared to Bitcoin’s 10 minutes. This makes Litecoin faster and, therefore, a preferred option by most users when it comes to sending and receiving coins from exchanges. Bitcoin, on the other hand, is more useful as a store of value given its high price.
So, clearly, Litecoin has a few advantages over the leader Bitcoin.
But why is its price still so cheap despite all the milestones the altcoin has achieved? To better answer this question, let’s circle back to where Litecoin started.
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Litecoin Price History
Looking at Litecoin’s price history will help us analyze its past price performance in order to understand why it has not been able to keep up with Bitcoin’s growth despite being strikingly the same.
Litecoin was launched in 2011 as some kind of a Bitcoin hard fork. It quickly gained traction and has remained among the top cryptocurrencies for many years. However, compared to Bitcoin, Litecoin’s growth is not exactly plausible. In fact, most investors have admitted that Litecoin’s performance over the last few years has been disappointing.
When Litecoin was launched, there was little action until around 2013, when it first went live. The coin was met with excitement from investors and started trading at around $4.30. Soon after, it had its first-ever bullish run and surged to $44 in late 2013.
However, by February 2014, the price had plummeted to below $20. Most people hoped that the downtrend would end there, and the price would soon look up again.
That didn’t happen. By August 2014, Litecoin had bottomed out at $5 and had a hard time seeing any growth thereafter.
In fact, between 2015 and 2016, Litecoin mostly fluctuated between $1 and $4, with interest from investors flaming out. In 2017, there was a market-wide breakout, and Litecoin took the opportunity to redeem itself.
Around this time, other cryptocurrencies were seeing incredible growth. For instance, Ripple grew by a staggering 36,000% while Bitcoin surged to an ATH of $20,000.
Litecoin was not left behind.
By the end of 2017, the altcoin had grown by 8000% to hit $375.29. Of course, being a sudden surge, the price again steeped at the start of 2018. It then entered a phase of wild volatility and kept dropping until June 2018.
It took several months for the price to rise and only went above $100 again in May 2019. In early 2020, Litecoin, like most other cryptocurrencies, was affected by the coronavirus crash that intensified around March.
By 12th March, Litecoin was trading at as low as $30.49, which was its lowest level since December 2018. The crash didn’t last long, and soon, the coin was again basking in its pre-COVID 19 glory. By August 2020, the price was playing above $66 as it prepared for another global bull in the cryptocurrency market.
This bull run started in late 2020, and Litecoin’s price quickly rose. By April 2020, it was once again trading above $300. Since then, there has been a series of rises and troughs, but the price hasn’t gone below $200 this year.
And while Litecoin has not been able to surpass its current ATH of $375.29, it has had a fairly stable growth and now trades around $354 according to price data from CoinDesk.
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So, Why is Litecoin So Cheap?
As we have seen from the price history, Litecoin has struggled to grow compared to Bitcoin. Although it is one of the oldest coins in the market, cryptos that came several years after it are doing much better. For instance, Ethereum, which came around in 2015 (around four years after Litecoin), is now trading above $3,400.
So, what is Litecoin doing wrong that has caused its price to remain so cheap?
Admittedly, Litecoin has faced a myriad of problems that keep bottlenecking its growth. At the root of these problems is the lack of originality. Litecoin is very much like Bitcoin.
And while it has some advantages over the leader, it came to the market at a time when Bitcoin was already attracting all the attention. The founders didn’t do much to market it, and most crypto enthusiasts treated it as nothing more than a copycat.
Due to the slow growth, many investors easily pick BTC over LTC. This means there is no new capital flow causing the price and transaction volumes to remain low.
Most miners have also abandoned Litecoin after mining rewards were reduced. This has resulted in increased insecurity, with the network’s hash rate falling.
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