Multicoin Capital on Litecoin: "LTC is significantly overvalued"

On September 14, 2018, Tushar Jain, a managing partner of Crypto Hedge Fund MultiCoin Capital Management published a post on blog titled "Debunking Market Narratives: Litecoin ($ LTC) Edition" which states that the most popular narratives used to defend Litecoin all appear to be inaccurate and have called LTC (also at around $ 50) "significantly overvalued". (Before proceeding, however, it is important to note that this hedge fund is short-term LTC.)

Tushar believes that Litecoin is "a relic of the cryptographic ecosystem with a pre-smart contractual platform", that its fundamental value is much less than its current price (about $ 50 when the report was written, and about $ 51.34 at the time of writing this article), and that the only things that support its price are "obsolete narratives" .

Here are the key observations that Tushar does on Litecoin:

• The main motivation for Charlie Lee who created Litecoin in 2011 was to have an altcoin that could be exploited profitably without requiring expensive GUPs (so that we could have a decentralized mine).
• Litecoin, which was a fork of Bitcoin, was different in three ways: hash algorithm (Scrypt instead of SHA256); block time (2.5 minutes instead of 10 minutes); total money supply (84 million instead of 21 million).
• Although the memory requirements of the Scrypt algorithm used by Litecoin may have been effective in making Litecoin fairly resistant to the extraction of GPUs and ASICs, today Litecoin mining is "as structurally centralized like Bitcoin mining. "
• Lee selling his entire LTC holdings in 2017 is" a massive red flag (though Lee claims he had to do this so that he could focus on adoption rather than price) and that not having a stake in the game reduces its motivation to continue the development of the protocol.
• Litecoin's transactions, although cheaper and faster than Bitcoin, help it to be a better means of exchange than Bitcoin, there There is much evidence to suggest that Litecoin has achieved a significantly greater uptake than competing cryptocurrencies like Bitcoin Cash and Dash. chins, like BitPay, accept an entire basket of cryptocurrencies, not just Litecoin. Furthermore, on March 26, 2018, the Litecoin Foundation announced that LitePay, the cryptographic payment processor that only dealt with LTC, had ceased operations. Finally, the further development of the Lightning network, the increase in the adoption of SegWit and other faster (and more scalable) blockchain platforms have further discredited the narrative of Litecoin, being exclusively qualified to serve as a means of payment for products and services.
• Store of Value (SoV), although it might seem reasonable to consider Litecoin "digital silver" if we consider Bitcoin "digital gold", Litecoin has no unique characteristics or use cases, which means it is unlikely to have "no meaning" long-term value. "
• Although Litecoin could be useful for the Bitcoin testnet since the improvements proposed to Bitcoin, such as SegWit and Lightning Network, are implemented fairly quickly on Litecoin, it is" absurd "that Litecoin has a valuation of $ 3 billion on this basis alone: ​​"To argue that Litecoin should be valuable as a Bitcoin testnet, this means that Bitcoin owners must voluntarily choose to sell some Bitcoins in exc hang for Litecoin to support the testnet with the sum of $ 3B. This is a ridiculous statement. "
• While block premiums decrease over time, Litecoin will not be able to continue to offer fast and cheap transactions unless the Litecoin Foundation is unwilling to" allow security to evaporate along with block premiums "
• During the huge rally experienced by the entire cryptography market in 2017. Since Coinbase, the US dominant cryptographic exchange, only supported BTC, ETH and LTC at that time, as a digital asset with the nominal value lower, it has been bought by many ingenious investors who wish to hold "whole" coins rather than a fraction of a coin.
• Several negative catalysts are in front, for example the growth in the number of coins / tokens listed by Coinbase, the maturation of the Lightning network (which will make it very fast and low-cost payments in viable Bitcoin), and potential sale of LTC by Bitmain to continue the support for BCH.

Tushar concludes the report with the following conclusion:

Litecoin has traded in a range of $ 41 and $ 3 58 in the last 52 weeks. Turning to around $ 50, we believe that LTC is significantly overvalued. Given the lack of a valid investment thesis, non-existent positive catalysts and strong negative catalysts, we expect LTC to continue to underperform the cryptographic market substantially.

According to data from CryptoCompare, at the time of writing (18 September 2018, 07: 00 UTC), LTC is trading at $ 51.71, down 8.62% in the last 24 hours

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