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Litecoin supporters often publicize the sixth largest cryptocurrency as "silver gold to bitcoin", but a cryptocurrency says it is also a rough diamond.
Writing in an eight-page report published Tuesday, eToro senior analyst Mati Greenspan argues that the litecoin price is trading at "a huge discount on what it should be worth".
Greenspan bases this assessment and many technical and fundamental factors.
Technical features
From a technical point of view, it detects the importance of Litecoin, a Proof-of-Work blockchain (PoW), being the dominant currency extracted using the scrypt algorithm. As long as this remains the case, Litecoin will remain highly resistant to 51 percent of attacks since there is not enough excess power to mount an assault on its network.
It also praises the developers of Litecoin to structure the cryptocurrency as a complement to Bitcoin rather than a competitor, allowing LTC to bind to the flagship cryptocurrency by adopting innovations such as Segregated Witness (SegWit) and Lightning Network (LN).
Adoption and other fundamental principles
Greenspan also argues that litecoin has achieved a more widespread adoption of many of its peers with comparable or greater ratings. LTC, for example, has more than twice the daily active address (DAU) of bitcoin cash (BCH), the fourth largest cryptocurrency with a market capitalization of about three times the size of litecoin valuation.
In fact, litecoin's market capitalization at the DAU ratio is among the lowest in the large cap cryptocurrency index, suggesting that the litecoin price is discounted compared to the current level of currency adoption.
Recent announcements, such as the acquisition by the Litecoin Foundation of a 9.9 percent stake in the German financial institution WEG Bank, could further strengthen the rate of adoption of the LTC.
Noting that the current bear market has pushed cryptocurrency prices down into relatively indiscriminate measures, Greenspan hypothesizes that litecoin as an individual activity has been oversold relative to its fundamentals. This is particularly true as the price of litecoin has dropped about 81 percent from its all-time high, surpassing the 71 percent blow from the market as a whole.
"Given that Litecoin has a stable and well-functioning product as well as a significant uptake, this bearish market in the entire cryptocurrency sector may have led to the loss of Litecoin," he concludes.
Shutterstock foreground image. TradingView Charts.
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