Why Litecoin price could crash nearly 50% ahead of third LTC halving event
|- Litecoin’s third halving is roughly six hours away, after which the miner rewards will be halved to 6.25 LTC.
- Litecoin price exhibits an interesting behavior a month before the halving event.
- If the similar outlook continues, LTC could undergo a steep correction to $47.
Litecoin (LTC) is ready to undergo the third halving event, which will reduce its block rewards from 12.5 LTC to 6.25 LTC. Taking a closer look at Litecoin price a month before the halving reveals an interesting outlook that could predict the fate of LTC holders.
Litecoin halving FAQs
When is the next Litecoin halving?
Litecoin’s third block halving event is scheduled to take place at a block height of 2,520,000, which is estimated to happen around August 3. The current block height is 2,511,587. The first halving took place in 2015 after the block height was 840,000. The second Litecoin halving event occurred in 2019 when the total block height hit 1,680,000. This event takes place roughly once every four years.
What will be the new block reward after the third Litecoin halving?
Halving is an important event for both miners and investors. After halving, the block rewards are slashed in half, as the name suggests. The first halving event in 2015 reduced the block reward from 50 to 25 and the second one in 2019 halved it to 12.5. The third halving, which is scheduled on August 3, will further reduce it to 6.25. This means that miners will go from receiving 12.5 LTC for mining a block to 6.25 LTC after the third halving.
How will halving affect Litecoin price?
After a halving event, the emission of LTCs is cut in half, which effectively triggers a reduction in the Litecoin supply. If the demand remains more or less the same, it creates a negative supply shock. The same dynamics are seen if the demand for LTC increases. Due to the reduced supply and high demand, it would trigger a rally in Litecoin price. But traders often anticipate this trend and try to get an exposure to LTC before the halving, causing a premature rally and a sell-the-news drop on the day of the event.
Why is Litecoin halving important to LTC holders?
Following a halving event, miners receive 50% fewer rewards for every block they mine and this creates scarcity in the altcoin, reducing the circulating supply of the asset. The event’s purpose is to control the inflation rate of Litecoin. Halving is therefore a key event that influences the asset’s price and market capitalization over time.
How different is Litecoin halving from Bitcoin halving?
From a technical perspective, it is not any different. But from an investor and miner perspective, there are lot of differences. For example, the concept of halving remains the same for both assets, but due to relatively lower total supply of 21 million and first-mover advantage, Bitcoin’s network effect and large market capitalization as a result has a significant impact on the crypto ecosystem as compared to Litecoin. Additionally, the effect of halving events is more pronounced for Bitcoin, because of the asset’s dominance, hence BTC halving receives more attention.
Read more on this Litecoin halving phenomenon here:
Three reasons why Litecoin whales could push LTC price to $100 before third halving
Litecoin whales prepare for third halving, how high will the LTC price go?
Something interesting happens to Litecoin price 50 days before halving
While the pre-halving rally is noticeable not just in a low market capitalization altcoin like Litecoin, it is more pronounced in Bitcoin. Interestingly enough, Litecoin price action forms a local top roughly a month before the halving event. One can speculate that this could be traders who capitalized on the pre-halving rally cashing in their profits.
Hence, this local top formation often leads to steep correction. Benjamin Cowen, an analyst, posted his observations regarding the same on social media platform X.
Providing an update on the referenced tweet below.
— Benjamin Cowen (@intocryptoverse) August 2, 2023
As mentioned a month ago, #LTC tends to peak in June/July of its halving year and then fade into the halving.
Following the halving, history shows you should temper your expectations on #LTC until the post-halving year (2025) https://t.co/vzlQI8MPqG pic.twitter.com/vZFIHUoG4f
LTC/USDT 1-day chart
A closer look at the technical indicators on the weekly timeframe reveals that the second Litecoin (LTC) halving event’s price action resembles the third LTC halving event price action. The Relative Strength Index (RSI) for the second event hovered around 50, the midpoint, before slipping below it, which triggered a 61% crash over the next five months. The second halving also noted a decline in the Awesome Oscillator’s (AO) histograms above the zero line, which eventually led to a flip below it.
If history repeats, causing RSI and AO to flip below their respective mean levels, Litecoin price could trigger a steep correction.
LTC/USDT 3-day chart
Bearish targets for Litecoin price short sellers
As seen in the chart below, Litecoin price is currently trading at $91.13. As LTC hovers comfortably above the declining trendline that serves as a support level, investors need to focus on the equal highs at $96.46 and the critical level at $94.12.
If bears are lucky, there might be a wick to the upside that sweeps $96.46, which could be a great entry for short sellers.
The targets are fairly simple. The $85.32 barrier was a stiff resistance level between April and June and has not been retested as a support level since the breakout on June 30. It is important to note the reaction of LTC as it revisits this key barrier.
If the said level fails to hold, short sellers can expect the downswing to continue until Litecoin price comes closer to $78.04. Here, bears can book partial profits. But the two key levels where sell-side liquidity is present are $65.57 and $47.32. These barriers are roughly 27% and 48% away from the current position.
LTC/USDT 1-day chart
Investors also need to note that the third quarter is typically bearish for Bitcoin, and as BTC slides lower, the rest of the crypto market continues to follow in its footsteps. Hence, a 50% crash in Litecoin (LTC) price is not out of the logical boundaries.
Read more on this topic:
Bitcoin likely to remain in red through the next quarter if history is any indication
Buy the dip or sit on your hands?
As confident as this forecast for Litecoin price might sound, traders must also look at the invalidation thesis. If Litecoin price conquers the $100 psychological level and flips the said hurdle into a support level on a higher timeframe like daily or weekly, it would not only attract sidelined buyers but also scare the bears away. The pressure created from spot buys coupled with the closing of short positions could propel Litecoin price to the next meaningful hurdle at $140.
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