Analysis: How is Litecoin halving a positive?

Yesterday, Litecoin successfully completed its four-year halving, and the price also rose, and everyone was happy.

The next halving will be in 2023. There have been more than four cycles in the cryptocurrency circle in the past four years, and basically, it is not the same group of people who see the halving every time. I believe that the people you are chatting in the group now are not the same people as last year.

A day in the cryptocurrency world is like a year in the real world. It’s really true.

So, the halving, a technical thing, seems to be only related to those who participate in mining, so why is it a good thing? This is also a question many people asked yesterday. I found that there are many explanations, which are actually far-fetched. However, in a place like the "results-oriented" cryptocurrency circle, if it is said to be a good thing, then I must explain it to you.

1. Miners will definitely pull the price up

The people most directly affected by the halving are naturally the miners.

The revenue and electricity cost were originally balanced, but now the revenue has been halved, so naturally many mining machines have to be shut down:

Miners, the most mysterious and wealthy group in the world of cryptocurrency, always appear in various legends in the currency circle.

In order to keep their mining machines running, miners have to pull up the price.

This is good news, doesn’t it?

2. Production halved, purchasing power unchanged

Who are the people who sell coins to the market every day? Of course, it’s the miners.

Why do miners mine coins? Of course, to make money. Even if they don't sell them immediately to make money, they still have to sell them to pay for electricity, right? So no matter what, a portion (or a large portion) of the Litecoin produced every day will flow into the market, forming a selling pressure. The market also needs to provide some purchasing power to catch this selling and keep the price stable. So many people say:

“Miners are the biggest short sellers in the cryptocurrency world.”

In fact, this logic is not necessarily correct. It should be said that miners are the most stable shorts in the currency circle. In short, the halving of production has led to a halving of the coins that miners can sell every day. If the purchasing power remains, then the purchasing power will buy coins on the market, thereby driving up prices.

Just like achieving a balance by adding water while draining it, you still add water now, but only half as much as before, so the pool will naturally become fuller and fuller.

This is a good thing that is easy to understand and makes sense.

3. There was a big market after the last halving, and it will be the same this time

In fact, this should be the main factor that everyone thinks.

Just as every Bitcoin halving brings a bull market, people have been "planted" with a consensus based on past market trends. Many people already believe that Bitcoin will reach an even more terrifying price height after the 2020 Bitcoin halving. This is not an ideal, but an inevitable event.

Shortly after the last halving, Litecoin reached a new high for the year, so after this halving, Litecoin will also reach a new high.

This good news also makes sense.

I believe that the above three logics have covered the main logic of most people's belief that "halving is a positive thing". However, the financial market often does not work in the cryptocurrency world to judge the future trend based on past trends.

Take yesterday's halving for example, how many people have already opened short orders waiting for the halving? In fact, on the day of the last halving, Litecoin actually fell, and many people also believed that "good news will definitely fall." But obviously, the trend of Litecoin surprised many people, because before and after the halving, Litecoin suddenly rose, and a lot of short orders were also exposed.

In fact, what many people are most concerned about is not the halving of Litecoin, but Litecoin as the "pioneer of Bitcoin". Its actions will become a reference for Bitcoin. Of course, it is not certain whether it is an important reference, but before the Bitcoin halving that will be seen soon, everyone will definitely talk about the halving of Litecoin.

Let me give you a summary and preview.

If the Bitcoin halving follows the same rhythm as the Litecoin halving (this is the premise), then the Bitcoin halving market will start about half a year before the halving (around October this year), and then reach its peak two months before the halving, gradually falling and adjusting until the market starts again around the halving.

Of course, the future will never simply repeat the past history, and no one knows how the market will go next. However, what is certain is that the history that everyone thinks of "falling before halving and starting a bull market after halving" will not repeat itself. I personally believe that the previous high will be exceeded before halving, and the halving market will start.

It is worth noting that this market situation only belongs to those who hold Bitcoin, not to those who hold other currencies. The cryptocurrency circle that started this year is so plain and boring.

Author: William Chen