Litecoin has completed its long-awaited halving today, but it seems investors have responded by engaging in a sell-off.
Litecoin has completed its third halving, block rewards now up to 6.25 LTC
The “halveevent is where LTC’s block rewards are cut in half permanently. This event is periodic, occurring approximately every four years, or approximately every 840,000 blocks of miner hash.
Today’s halving was Litecoin’s third, meaning that block rewards have been cut three times since its inception. The first halving saw the cryptocurrency drop its block rewards from an initial 50 LTC to 25 LTC, and the second saw the tips drop further to 12.5 LTC.
With the latest halving event, miners’ rewards for solving blocks have been further reduced to 6.25 LTC. The reason halvings even exist is because they serve as a benchmark for controlling asset inflation.
These block rewards that miners receive are the only way to introduce new tokens into the circulating supply, so by repeatedly reducing them, you are causing the cryptocurrency’s supply to rise slower and slower.
Eventually, if the halvings continued, the block rewards would approach zero. This would happen approximately in 2142. After this point, the stock of the asset will reach its maximum limit and the miners will have to rely on transaction fees to pay their ongoing charges.
Since halvings are major events, it makes sense that there’s been a lot of discussion about this latest event now that it’s coming up. In early July, the asset had seen a sharp rally towards $114 as the market may have become hopeful for the halving, which was only a month away.
However, this rally picked up steam quickly enough and since then LTC has struggled to build significant bullish momentum.
LTC has plunged during the past day | Source: LTCUSD on TradingView
Today’s halving has also failed to change anything in this matter as Litecoin has instead only continued to fall. It appears that the event has indeed been a buy the rumor, sell the news type of scenario.
After the latest decline, Litecoin has slipped below the USD 87 level and is down almost 7% in the past 24 hours. These high losses mean that LTC was the worst performing coin of the top cryptocurrencies by market capitalization during this period.
While the asset’s price performance may have been poor, LTC supporters can take solace in the fact that the asset has come a long way in terms of other network-related metrics since the previous halving, such as data from IntoTheBlock shows:
The growth of the LTC network | Source: IntoTheBlock on X
Interestingly, the price at which both halvings occurred was about the same. The cryptocurrency seems to have done well in terms of user base and utility-related growth.
This impressive increase in adoption may be because Litecoin offers cheap and fast transactions compared to some other networks such as Bitcoin. However, LTC investors can only hope that this growth will also be reflected in the price.
Featured image of Kanchanara on Unsplash.com, charts from TradingView.com, IntoTheBlock.com