Litecoin (LTC) halving 2023
On 2 August 2023, the third Litecoin (LTC) halving took place at a block height of 2,520,000, due to which miners' rewards for mining a new block fell from 12.5 to 6.25 LTC.
What is Litecoin halving?
Halving is a two-fold reduction of rewards for mining in decentralized networks. The halving mechanism was first introduced in the Bitcoin protocol launched in 2009.
Created in 2011, Litecoin borrowed the halving mechanism and architecture of Bitcoin but began using its hashing algorithm Scrypt, instead of SHA-256, to solve the problems with the rapid growth of network complexity, requiring more and more computing resources. The developers achieved this by quadrupling the time to mine a block.
Halving refers to deflationary mechanisms that halve the rate at which new coins are generated (issued). After each halving, the amount of resources required to mine the same number of coins increases, which is supposed to make the asset more valuable and expensive and encourage miners to accumulate assets. If it becomes unprofitable for miners to sell coins and start hoarding them, they reduce the pressure on the price and contribute to its growth.
Previous Litecoin halving dates
Initially, the reward for a block on the Litecoin network was 50 coins, just like Bitcoin. The halving frequency of both protocols is the same — approximately every 4 years. Litecoin halving occurs every 840,000 blocks (Bitcoin has a frequency of 210,000 blocks). However, since the speed of generating new blocks in the Litecoin protocol is 4 times higher than Bitcoin, the periodicity remains approximately the same.
The first Litecoin halving occurred on 26 August 2015, after which the premium per block decreased from 50 to 25 LTC. Since 2013, the price of the LTC cryptocurrency has fallen from an all-time high of $40 to $3, but after the halving, the exchange rate started to rise again. In December 2017, the LTC exchange rate reached a new all-time high at $320.
The second halving took place on 5 August 2019, and as a consequence, miner rewards became even halved, dropping from 25 to 12.5 LTC. Shortly before the event, the altcoin price jumped from $43 to $141 but fell sharply to $89 right before the halving. Sometime after the reward cut, the LTC price resumed its rise and reached its recent all-time high of $412 in May 2021.
The third and last Litecoin halving occurred on 2 August 2023, and now miners receive 6.25 LTC for each block mined. Since the previous halving, the annual inflation rate of LTC coins has decreased from an estimated 4% to 2%.
Shortly before the halving, the price of LTC collapsed from $82 to $64. This is often due to the uncertainty surrounding mining: investors do not know how miners will behave in advance, as their income is cut in half without considering the commissions paid by users. However, despite this, shortly before the latest halving, whales purchased more than 590,000 LTC worth about $59 million.
According to blockchain observers, the next Litecoin halving is expected to take place tentatively on 7 July 2027. The reward for a mined block will be halved further to 3,125 LTC.
What to expect after Litecoin halving?
If you look at the Litecoin chart, you can see that the LTC exchange rate updates its historical maximum every time about 2 years after the halving. Analysts have identified the cyclical nature of the price dynamics, which persists throughout Litecoin's existence and is also true for other cryptocurrencies such as Bitcoin.
Whether the price of Litecoin cryptocurrency will hit a new high again is hard to say. However, if it does, it is unlikely to happen in the next year, as the LTC rate has dropped significantly and, at the time of writing, is around $72 — which is about 82% lower relative to the all-time high.
In addition, the price dynamics are influenced by many factors, such as the demand for cryptocurrency and the current situation in the crypto market. It is essential to know the trends to assess the prospects of Litecoin and other cryptocurrencies. For example, the number of LTC holders has increased by 67% since the beginning of 2023, according to CoinMarketCap. Still, the total balance of Litecoin holders' wallets, on the other hand, has decreased from 10.44 million to 7.93 million LTC.
Conclusion
Whether Litecoin will be able to renew the high after another halving — time will tell. As historical data shows, the prices of BTC and LTC cryptocurrencies reached their high within three years after each halving. The crypto market has changed significantly over the past 5 years, with new players entering the game, including L2 solutions to scale Ethereum, sidechains and modular blockchains.
Litecoin's price performance doesn't seem overly optimistic either: while the 2017 high surpassed the previous high by about 8 times or $280, the following high in 2021 is only a quarter of that and less than $100. By comparison, the last highs of BTC and ETH surpassed the previous ones by more than 3 times.
