The price of Litecoin ($LTC) a digital currency often referred to as the silver to Bitcoin’s gold, has seen its price climb more than 15% over the past week to a one-month high of over $95, although the cryptocurrency has since dropped to $92.
The price rally has seen LTC outperform most other major cryptocurrencies, only failing to beast liquid staking solution token Lido ($LDO), which saw its price rise over 36% during the same period.
According to Coinglass data, as CoinDesk reports, the dollar value of open futures contracts tied to Litecoin has recently increased to its highest level since early December to now stand at $478 million. A rise in open interest indicates an influx of new money into the market, though it is unclear if the leverage is tilted bullish or bearish.
Litecoin’s price may be benefiting from a recent congestion on the Bitcoin network that stemmed from the growing adoption of Bitcoin Request for Comment (BRC)-20 tokens, which are built with Ordinals and stored on the base Bitcoin network.
The congestion was so severe that earlier this month leading cryptocurrency exchange Binance briefly halted withdrawals on the Bitcoin blockchain. Binance addressed the issue on social media at the time, where it stated that to prevent a similar occurrence in the future it was adjusting its withdrawals fees, which are used to pay for transactions on the Bitcoin blockchain.
The exchange added it will keep monitoring on-chain activity and “adjust accordingly if needed.” It also added it’s working on enabling BTC Lightning Network withdrawals, which would alleviate such situations in the future.
A fork of the BRC-20 token standard has also been launched on Litecoin, called the LTC-20. The number of confirmed transactions on LTC has reached a new record high of 580,000 on May 10, while its active addresses grew to 830,000 as a result.
As CryptoGlobe reported, Litecoin has potential to see significant gains against the flagship cryptocurrency ahead of its highly-anticipated August halving event, according to its creator Charlie Lee.
This potential growth can be attributed to Litecoin’s inherent design features, Lee said, which include higher throughput, enhanced scalability with extension blocks, better fungibility, and increased privacy via MWEB.
The recent price recovery of Litecoin has been accompanied by a growing buzz around the upcoming block reward halving. In August 2023, the Litecoin block reward for miners will be slashed by 50% from 12.5 LTC to 6.25 LTC.
Consequently, the new LTC supply will be reduced by half, theoretically making it scarcer on the market and driving its price upward if demand remains flat or grows.
As CryptoGlobe reported, historical Litecoin price data suggests that the price of Litecoin could surge months after its halving event to the point it hits a new all-time high next year. The cryptocurrency could, however, endure a correction right after the halving.
According to data analyzed by popular cryptocurrency analyst Rekt Capital, Litecoin “trends to rally quite strongly before its halving,” with the cryptocurrency rising 820% after bottoming out 122 days ahead of its first-ever halving, and rising 550% after bottoming 243 ahead of its second halving.
Historically, the cryptocurrency rallied more after its halving event. After its first halving, LTC surged 12,400%, while after its second halving it rose 1,573%.
It’s important to point out that the effect of halving events on the price of a cryptocurrency is not certain, and opinions on the matter vary among analysts. The past performance of a cryptocurrency does not guarantee future performance.
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