Bitcoin took the digital world by storm. Since then, multiple Altcoins have been developed and brought forward to prove their efficacy and stand a chance to outperform Bitcoin. However, a few were developed to work in cohesion with Bitcoin, like Litecoin. If Bitcoin is “Digital Gold,” Litecoin is considered “Digital Silver.” Like Bitcoin, Litecoin is one of the oldest cryptocurrencies and is among the top 10 cryptos.
What is Litecoin?
Litecoin is a crypto token trading with the symbol LTC. It was created in 2011 by Charlie Lee, who has extensive experience in technology and has been an engineer at Google and Coinbase. Litecoin has a market cap of over $6 Billion and has four times the supply of Bitcoin. It was developed to provide quicker transaction verification and processing time than Bitcoin. As opposed to the Bitcoin network, Litecoin takes 2 ½ minutes for block generation. However, LTC, too, follows the Proof-of-Work consensus.
Litecoin has outperformed the majority of Altcoins since its inception. The Litecoin Foundation works closely towards developing and adopting Litecoin to build partnerships and funding opportunities. Litecoin is often addressed as the leader of altcoins. It often indicates the movement, and the rest follow. While investing, traders often observe LTC’s price action and movement to take their trade calls for altcoins. When LTC takes off, many smaller tokes begin to give explosive gains, and the investor’s risk appetite also increases.
Litecoin Fundamental Analysis
Litecoin is often known as a testing ground for Bitcoin and gathers much developer interest. This is what keeps LTC steady and moving. Hence, there is no reason for investors not to believe in Litecoin’s ecosystem. The LTC derives its value from the limited supply and mirroring image of Bitcoin. Despite the sharp drops and the crypto bubble burst in late 2021 and 2022, and Litecoin has shown undying consistency in on-chain volume. While we notice that LTC is consistent towards its bottom price level, it holds solid historical norms and has significant investor interest. Hence, the LTC ecosystem, in general, has the potential to outperform this year and pace towards a bullish trend in 2023.
Strengths and Weaknesses of Litecoin
While Litecoin shares similarities with Bitcoin and has consistently provided returns to its early bird investors, there are several points of strengths and weaknesses of the coin that you must know before investing.
- Very Low Transaction Fees
- Faster transaction processing time than Bitcoin.
- Has given massive returns to its investors.
- Has come out as a survivor and gained developer and investor interest.
- The late 2021 and 2022 crypto bubble burst has led to tarnishing investor sentiments.
- The developer, Charlie Lee, sold a massive amount, which led to the loss of investor confidence in the coin.
Is it a Good Investment?
While we draw comparisons between Litecoin and Bitcoin, you should know that the halving technique doesn’t typically work with LTC. It hasn’t performed as Bitcoin does because a reduced supply of Bitcoin resulted in high demand and a considerable price hike. Whereas, Litecoin failed to perform in that sense. It performed when the overall crypto market sentiment was positive, reaching an all-time high of $255.79. However, the crypto market fell drastically last year and lost nearly 80% of its value.
Litecoin has undoubtedly shown resilience in the past and will continue to do so. But buying LTC thinking it will work like BTC is a mistake. With multiple falls in the past year and a half, LTC has always bounced back and shown recovery. It has a substantial risk-reward ratio, making LTC one of the preferred coins of investors.
Like other crypto tokens, LTC can be purchased in smaller portions. However, Litecoin is a highly volatile asset. Here is a simple math about investment, the more money you invest, the higher the chances of a great return on investment. That said, it is imperative to note that you should only invest the money you are comfortable losing, as the crypto markets are notorious and volatile.
As advice, one should never opt for bulk buying of any crypto token. You should always buy a limited quantity and then, over a period, build your position at a better average. This helps you to buy more every time the market falls and not get worried about the temporary falls in the market.
The crypto market struggled to stay afloat in 2022. However, the Litecoin market could withstand the storm of extreme volatility. Many investors believe an LTC dip is an excellent opportunity to purchase and build a position in this crypto asset every time. The belief is derived from the asset’s growing popularity, consensus, and development model.
While the crypto market has the potential to deliver remarkable returns, it has the potential to wipe out your money too. Hence, be wary of the amount you invest at all times. You can make money in the long run with basic math and economic techniques.