LTC production reduction is coming, where will the future trend go?

The concept of LTC production reduction has been hyped from the beginning of the year to now. LTC is about to be halved tonight. Can it change the volatile market of LTC in recent days?

[source: litecoinblockhalf.com]

There are less than two hours until the LTC halving

In the first half of this year, LTC has experienced a gratifying market, soaring from about $30 to around $90, and even later soaring to $143.5, a 3.7-fold increase. Many people believe that this is caused by the rise of BTC this year, but objectively speaking, this is not unrelated to the halving of LTC.

Compared with the last production cut, perhaps we can get some clues from it.

As a test field for BTC, LTC will reduce production every four years, just like BTC. The LTC mined in each block will be halved. The last halving occurred on August 26, 2015, when the LTC block reward was halved from 50 to 25. F2Pool also mined the first block of LTC after the halving.

From the perspective of supply and demand, the halving of production will lead investors to expect a decrease in supply in the future, disrupting the original supply and demand balance and causing prices to rise.

At the beginning of 2015, the production cut broke out three months in advance. The price of LTC was still at $1.34 at the time, and then it soared to a high of about $8.5 in July, an increase of more than 5.3 times. Within a year after the production cut, although the price of LTC fell, it basically stabilized between $2.5 and $5, and the price increased exponentially compared with the previous price.

[LTC price trend from 2013 to 2016, source: coinmarketcap.com]

This year's LTC market before halving has a highly similar trend to the last time. It also reached a high point more than a month before the halving, and then adjusted slightly. If it continues to trend like this, LTC will stabilize in a volatile range for the next six months, waiting for the arrival of the next bull market.

Despite this, many analysts have expressed different opinions. After all, history is never a simple repetition, but a development and change towards highly similar situations.

Miles, an analyst at CoinNess, believes that the correlation between LTC and BTC is 0.79, which is a strongly correlated currency. The rise and fall of LTC is largely related to BTC. From the perspective of the price resonance relationship between the two currencies, BTC has been mainly sideways in the period after the last LTC halving. Even though LTC has a significant positive impact from the halving, the market is also flat. Only when BTC rebounded at the end of October did Litecoin take the opportunity to rise by more than 50%. Therefore, we believe that the halving of LTC cannot give rise to its independent rising market.

Coindesk analysis holds a different opinion. They believe that the LTC halving will reduce the current mining reward from 25 LTC to 12.5 LTC. The reduction in output will disrupt the current supply and demand in the market, and the inflation rate will also drop from the original 8.4% to 4%, which will stimulate users' desire to buy LTC and push LTC prices further up.

However, we will also find that although LTC's trend is highly similar to that before the last halving, the amplitude is not as large as the last time, and there are some other deviations.

[Changes in LTC computing power in the year before the first halving, source: bitinfocharts.com]

Looking back at the last LTC halving, LTC hashrate fluctuated greatly within a year, and there was no large influx of hashrate when the LTC price increased. The hashrate decreased by 22% within a week after the halving. The price increase did not drive new miners to join the network, and the halving caused old miners to leave, which may be the reason for the sluggish trend of LTC after the last halving.

[ Changes in LTC computing power in the year before the second halving , source: bitinfocharts.com]

In contrast, the LTC halving this time, since the LTC price rose at the beginning of the year, computing power has continued to flow into the LTC network, and the addition of new miners has brought sufficient fresh blood to LTC. Although today's halving will also cause some miners to flee, the accumulation in the first half of the year has given LTC prices sufficient support.

Therefore, although the trend before the halving is very similar to that of four years ago, judging from the change in computing power, LTC is supported by more and more miners, and the trend after the halving may surprise us. In addition, BTC is about to halve in the foreseeable future, which will also have a great positive impact on LTC, which has a strong correlation with BTC, and will boost LTC's rise.

From the mining income of LTC mining machines, we can see that among the mining machines currently included, Innosilicon A6 has the highest income, with an estimated daily net income of 14.71 yuan.

If the daily output of LTC is halved and the price of the currency remains unchanged, the daily net income of Innosilicon A6 will become 2.36 yuan, and the income of other mining machines will become negative.

[Comparison of LTC mining machine mining revenue on August 5, source: f2pool.com]

While waiting for the LTC mining cost to be clarified, F2Pool also provides another option for everyone - DGB-SCRYPT.

As a multi-algorithm currency, DGB also has a branch with the same algorithm as LTC.

Official website:

https://www.digibyte.co/digibyte-global-blockchain

Block Explorer:

https://digiexplorer.info/

Algorithm: Scrypt

Total: 21 billion

Consensus: PoW

Block time: 6 0s

PoW block reward: 658.21123431 DGB (July 2019)

Exchange:

Bittrex:

https://international.bittrex.com/Market/Index?MarketName=USD-DGB

Huobi:

https://www.huobi.co/zh-cn/exchange/?s=dgb_btc

Mining Information

Mining machine: Scrypt miner

Mining address:

stratum+tcp://dgb-scrypt.f2pool.com:11111

Mining tutorial:

https://blog.f2pool.com/zh/mining-tutorial/dgb

The daily revenue of DGB is expected to exceed that of LTC after the halving tonight, making it a good choice for the transition period after the reduction of LTC revenue.