Litecoin Halving Countdown: Supply Shrinking and Price Volatility

Author: BEN STRACK, blockworks Translation: Shan Ouba, Jinse Finance

Analysts said that the historic price increase brought about by Litecoin's halving has already occurred in this event.

Most people in the crypto circle know that next year Bitcoin’s mining reward will be cut in half. However, few realize that Litecoin’s own halving will happen earlier than Bitcoin’s.

In Litecoin's blockchain network, when a block is successfully mined, miners will receive a certain amount of Litecoin (LTC) as a reward. This reward is initially 50 LTC per block, but is halved every 840,000 LTC mined, roughly every four years.

Currently, the mining reward per block is 12.5 LTC, but this Wednesday, this reward will be halved to 6.25 LTC.

Litecoin has a supply cap of 84 million LTC, similar to Bitcoin's 210 million BTC supply cap. About 87% of Litecoins are currently in circulation.

Price movement is constantly changing

Matteo Greco, a research analyst at Fineqia International, told Blockworks that Litecoin grew 824% in the months leading up to the 2015 halving and 525% in 2019, peaking seven weeks before the halving.

Greco said: “The next halving is expected to take place in less than 24 hours, and if history repeats itself, this means that the 40% price increase that LTC showed at the end of June may be the highest price in this mid-term.”

LTC hit $113 on July 3, its highest price since April 2022, according to CoinGecko.

Litecoin was trading at $93.10 as of 3 p.m. ET Tuesday, up 4.3 percent from seven days ago and about 0.5 percent over the past 24 hours.

CoinShares analyst Max Shannon told Blockworks: “The Litecoin halving appears to be a ‘buy the rumour, sell the news’ event, with a sharp price rally in the first few months, followed by a reversal in price action, suggesting that the supply shock has been priced in.”

Does it have an impact on miners and other crypto tokens?

As rewards for mining Litecoin decrease, miners' profits may suffer, Greco said. However, when the hash rate drops, the difficulty of mining decreases, which reduces the cost of mining, which will offset some of the impact.

Yang Youwei, chief economist of BIT Mining, pointed out that due to the dual mining mechanism of Litecoin and Dogecoin, the impact on the profitability of miners may be further alleviated. He added that while Litecoin’s block reward will be halved, Dogecoin’s block reward remains the same.

Greco said: "All things considered, at this stage, the halving will not have a significant impact on any component, it is more of a narrative used by investors and traders to create volatility and speculation."

Yang said that although the cryptocurrency market is generally less volatile at the moment, compared with previous halvings, the price of LTC has not experienced large fluctuations. He added: “Due to its relatively small size compared to Bitcoin, and its unique [proof-of-work]-based nature and specific mining algorithm, the Litecoin halving may not have an impact on Bitcoin or other altcoins. Tremendous influence."

According to CoinWarz, Litecoin has a hash rate of 786 terahashes per second (TH/s), while Bitcoin has a hash rate of about 356 terahashes per second (EH/s).

Bitcoin was trading around $29,130 on Tuesday afternoon, down 0.2% from the previous day.