OnChain Standard

Grayscale’s Win gives Life to Litecoin? Should you expect a post halving rally?

litecoins
Being one of the original cryptocurrencies, Litecoin has consistently exhibited a more consistent price trajectory in contrast to its more erratic counterparts. This enduring stability can be traced back to Litecoin's well-established standing within the market. Nonetheless, the recent Grayscale victory against the SEC in their ETF battle is widely regarded as a pivotal element influencing Litecoin's future price dynamics.

In a surprising turn of events on August 29, the United States District of Columbia Court of Appeals delivered a verdict that challenged the stringent stance of the Securities and Exchange Commission (SEC). The court ruled in favor of Grayscale‘s aspiration to transform their over-the-counter (OTC) Bitcoin Trust (GBTC) into an exchange-traded fund (ETF) tied to Bitcoin’s spot price.

Previously, the regulator had blocked the conversion of GBTC into an ETF, citing concerns about potential price manipulation and creating a roadblock for Grayscale. In response, Grayscale resorted to legal action. Before this recent ruling, the presiding judge had urged the SEC to provide more clarity on the reasons behind their denial of Grayscale’s application.

Some facts about Litecoin:

  • Litecoin is a decentralised cryptocurrency that was created by Charlie Lee on 13 October 2011.
  • In May 2021, LTC price recorded its all-time high of $412.96.
  • Litecoin is 4 Times Faster than Bitcoin.

Litecoin Rides the Wave of Positivity

Following the court’s groundbreaking decision, Bitcoin prices surged, subsequently casting a positive influence on Litecoin. Presently, BTC has witnessed a remarkable uptick of approximately 10%, staging an impressive recovery from its support level of around $25,800, which had been observed the previous week. Simultaneously, LTC, often referred to as the “silver” to Bitcoin’s “gold,” has also risen by 7% at the time of writing, showing signs of reversing the losses suffered on August 17.

While big firms are predicting big for Bitcoin, Trading at approximately $70, Litecoin is experiencing a noteworthy surge in trading volumes. Within the realm of cryptocurrency trading, a surge in trading activity, irrespective of the market trend, often signifies increased engagement and offers a subtle insight into traders’ prevailing sentiments.

Amidst escalating trading volumes and expanding prices, it becomes plausible to speculate that bullish investors are strategically positioning themselves for further gains in the upcoming trading sessions. Conversely, substantial price declines coupled with rising trading volumes might indicate bearish sentiments, potentially leading to price drops.

A Glimpse into a Post-Halving Rally?

The discernible surge in LTC trading volumes, as depicted in the daily chart, could potentially mark a turning point for the digital asset that has been grappling with downward pressure in recent sessions. For context, LTC has experienced a notable decline of 26% in August 2023 alone. This decline has persisted despite the news of the Litecoin network halving miner rewards to 6.25 LTC in early August.

In the realm of cryptocurrencies, halving events have historically triggered renewed cycles of heightened demand for the respective coin. This phenomenon is well-documented in the case of Bitcoin, where past occurrences of halving have been followed by substantial rallies in the months that ensued. As for Litecoin, historical trends have shown mixed outcomes, although current spot prices are generally higher than those observed in 2019 when the last halving took place.

Given Grayscale’s role in stimulating demand for Bitcoin and other proof-of-work altcoins like Litecoin, the big question now is whether the bullish momentum will persist and propel prices, particularly of LTC, to higher levels. Presently, LTC prices are tracing a trajectory that aligns with the bearish candlestick observed on August 17.

From a technical standpoint, this aligns with a bearish interpretation based on volume analysis. However, a decisive and robust reversal that propels LTC above the $75 mark, thereby recouping losses from August 17, could potentially trigger heightened demand. Such a scenario might lay the foundation for a much-anticipated post-halving rally, providing relief to Litecoin enthusiasts and investors alike.