25 December 2018: 30 & nbspUTC
25 December 2018 at 07: 44 & nbspUTC
If our 5 reasons to invest in Litecoin have convinced you to make a leap of confidence in this holiday season, you may also ask yourself about the price of this altcoin. Currently priced at $ 31.17 per unit, Litecoin sees some losses in terms of market value. However, this does not mean that the currency will not recover soon enough and regain the love of investors. So, how does the Litecoin price really work? And what determines the market price of this? More importantly, what are the factors behind setting a certain price that you have to pay when you decide to buy Litecoin from an exchange?
You can also read: Beginner's Guide to Litecoin
In this article, we explore and explain the basic aspects involved in determining the price of Litecoin. It should be noted that the determinants of the Litecoin price are usually in tandem with the determinants influencing the prices of other cryptographic coins, unless they are stable coins. Stablecoins, or cipher coins that are supported or anchored in stable fiat coins, tend to function slightly differently when it comes to prices.
Factors that determine the price of Litecoin
In understanding the factors behind Litecoin's price, we must use one of the basic principles of economic theory: the law of supply and demand.
The law of supply and demand states that when the supply is low and demand is high, other things being equal, the price tends to rise and vice versa.
Bearing in mind this definition and its logic, we understand how it works in the cryptographic market:
1. Supply of Litecoin
Litecoin's supply is set at 84 million. Now, there is a circulating number of cryptocurrencies that is currently on the market. Now, even beyond this supply in circulation, you know that more Litecoin can be extracted and introduced to the market. Litecoin Mining therefore plays a crucial role in determining the offer.
Now this aspect of the offer forms a part of the bid-offer chart that will determine the price of Litecoin.
You can also read: How many Litecoins are left?
2. Application for Litecoin
In addition to supply, the number of people who actually want to acquire Litecoins also plays a crucial role in the pricing of cryptocurrency. The meeting point between supply and demand represents the market price of said cryptocurrency.
How is Litecoin's price determined in an exchange?
When you try to buy or sell Litecoin in return, you usually place a purchase order or sell advertising. There, you mention the amount for which you are ready to sell a certain number of Litecoin. Now, all these orders and sales offers are registered in an overbook. If you set a price too high, such as $ 1000 for 10 Litecoin, the sale offer will remain unfulfilled. People actually willing to trade will set their prices at a moderate value, which represents a meeting point between the offer (sales offers) and the demand (purchase orders). The market price or the price you pay here will be established on the basis of this consideration.
However, you should note that you may have to pay a little more or less depending on the frequency of exchanges on that exchange, the status of the user or the level of the exchange, and so on.
Other Factored Determines the price of Litecoin
The price of Litecoin at any time will also be influenced by speculation, exposure to the media, adoption levels (which also influence demand), mining difficulties, and the use of electricity during extraction. and so on. The cons and pros of Litecoin are many and naturally do their part to influence the final price.
Here are some other articles to read
How to buy Litecoins?
How to protect cryptographic portfolios?
How to sell your Bitcoins?