[ad_1]
Price-wise, Litecoin (LTC) has had a pretty tough year and currently the altcoin has dropped 51% over the past twelve months. The lack of GitHub activity and planned protocol updates prompted Litecoin co-founder Charlie Lee to admit that 2019 saw an all-time low in the number of developers working on Litecoin Core, the software behind the network nodes.
The start of 2020 was no different and Charlie Lee asked for voluntary donations from LTC miners to increase funding for development. Uncertainties about Litecoin’s future have caused investors to lose interest in the project and this is reflected in both the chain and LTC’s trading metrics.
Interestingly, while most would consider investor disinterest as a negative factor, some have quietly accumulated LTC.
Litecoin’s trading volume drops to a 2-year low
Volume is the most relevant indicator of traders’ interest and Litecoin has failed miserably in this area. The volume of trading on major exchanges has been on a downward trend over the past twelve months and has recently fallen to its lowest level in two years.
Average volume of Litecoin over 30 days. Source: TradingView
Litecoin ranks third in Nomic transparent trading volume with $ 80 million per day. This is 50% higher than Bitcoin Cash (BCH) and EOS, but the figure remains 45% lower than the previous eleven months when there was an average of $ 146 million in daily volume.
A number of reasons could be behind the drastic change and it should be noted that even lower activity on exchanges does not necessarily translate into less use of the blockchain, as has been the case.
On-chain metrics provide realistic information on transfers, commissions, active addresses and many useful indicators that will be of interest to traders.
Transfer value changed
The transfer value is a leading indicator of the chain that measures user activity as it adds up all the coins moved daily. CoinMetrics’ analysis provides more accurate data by adjusting these figures to exclude mixers and transactions between the same entities.
Litecoin daily adjusted transfer sum 14 days average. Source: CoinMetrics
Adequate daily transfers stood at around $ 20 million, 83% below the 2019 highs. The current level is comparable to Tezos (XTZ), a much newer and smaller cryptocurrency whose case d main use has nothing to do with fast or cheap transactions.
Significant drop in transaction fees
Charlie Lee’s proposal included smaller block intervals than Bitcoin (BTC) and a simpler algorithm that removed the signature from the original data for higher transaction output.
Such a move may have sparked substantial interest in Litecoin (LTC) in the past, but it is no longer valid as users realized that 270 confirmations were needed to match the computing power behind 3 mined blocks of Bitcoin, according to How Many Confirmations by Luke Childs. analysis.
Litecoin means 14-day average transaction fees (USD). Source: Coinmetrics
Average LTC fees per transaction fell to $ 0.011, the lowest level since October 2015. While there could be many reasons behind this, including using SegWit’s 75%, the previous transfer value analysis daily indicates weak demand from its users.
While the average block size of Bitcoin exceeds 1.2 megabytes most of the time, Litecoin is on average less than 0.2 megabytes despite both having similar capacities.
Low usage results in small fees, reducing miners’ interest and resulting in a negative feedback loop as investors pay attention to the processing power behind each blockchain.
Reduced hashrate
Litecoin hashrate. Source: CoinWarz
Litecoin’s hashrate has fallen by 45% since its October 2019 halving, which usually raises concerns about attacks by 51%. This unused processing capacity could theoretically be used to compete with honest miners.
Either way, there isn’t a positive reading of fewer miners turning investments towards Litecoin. Unlike trading, mining is purely a long-term commitment as the payout usually exceeds a quarter and sometimes a full year.
Investors are hoarding instead of dumping LTC
After so many negative indicators, owner activity would be expected to show weakness as both price and network usage have been falling for over a year.
One could also mention the poor performance of recent code advances, including the privacy capability of the MimbleWimble technology proposed in October 2019.
Litecoin UTXO age not spent. Source: Investificar.com.br
Oddly, the opposite holds true, as 63.8% of Litecoin’s offering has remained unchanged over the past 12 months. In fact, this is the highest level ever.
According to the Hodl Wave chart above, also known as the UTXO age distribution chart, the percentage of coins that have not been moved is increasing at an extraordinary rate.
The number of coins not moved for 12 or more months in early 2020 was 56.7%. This additional 7% held by long-term investors is currently valued at $ 209 million, which is enough to acquire 30% of the entire DASH supply.
There is no way to ensure the rationale behind this hoarding activity, but its impact on the current supply is clearly positive.
This activity does not change the fact that the same amount of LTC will continue to be mined every day until the next halving in 2023, however it does provide a critical level of price support.
Investors have recently speculated on a potential Litecoin integration with Cardano (ADA) and if true, this could be a bullish factor for Litecoin.
There is also the possibility of a crypto market bullish trend occurring and when investors start talking about an ‘alternate season’ start, Litecoin may face greater odds of big pumps as long-term investors tend to be less. tempted to sell early price movement.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your research when making a decision.
[ad_2]Source link
