Why is Litecoin (LTC) rising? What is the reason behind this explosive growth? As with my previous post, this is a question I have been asked numerous times over the past couple of days. There are 4 fundamental reasons why Litecoin is rising and I will discuss these below.
1. Coinbase rapid growth
This is probably the single, most important reason why Litecoin is sky-rocketing. Coinbase is adding 100,000 new users daily and with new users, there is new money. Coinbase currently only offers 3 Cryptocurrencies for purchase; Bitcoin, Ethereum and Litecoin. At the time of writing, Bitcoin is priced at $17085, Ethereum at $580 and Litecoin at $320.
The circulating supply (number of coins in existence available for the public) and maximum supply (maximum number of coins available) for each of these coins is vastly different. This means that the value of 1 coin for each of these Cryptocurrencies is different. However, new users are unaware of this. They are under the illusion that by accumulating Litecoins, they are gaining more value.
Also, many new users are not aware that Cryptocurrencies (most of them) are divisible. Unlike the Equity markets where you buy an X amount of shares of Company Y, in the Cryptocurrency space, you can have 0.123 Bitcoins or 5.678 Litecoins. This leads new users to purchase Litecoin over Bitcoin since is cheaper as a “whole coin”.
2. Media Exposure
Over the past few days, Charlie Lee (Litecoin’s creator) has been making appearances on public media including CNBC and Glenn Beck. This gives Litecoin a greater exposure and given how simple exchanges (and in particular, Coinbase) make it to buy Litecoin, it is no surprise Litecoin is shooting for the moon.
3. Gateway to other Cryptocurrencies
Litecoin is the best gateway from FIAT to any other Cryptocurrency. Currently, transferring Bitcoin costs approximately 22$ and takes 69 minutes. Similarly, the Ethereum network is congested meaning transactions take more time to process — in addition to being slightly more expensive than Litecoin. On the contrary, Litecoin transactions are much cheaper and faster than the other two.
Now you may be asking; if someone buys Litecoin (in order to transfer it from exchange X to exchange Z) to buy other Cryptocurrencies, shouldn’t the price remain the same? That is absolutely correct, but with Litecoin’s explosive rise (due to the other reasons laid out on this post) people opt to keep a portion of their Litecoins causing the price to increase.
4. Bitcoin’s stagnation
Bitcoin’s volatility (for the standards it has set the past few weeks) has been pretty tame since Monday. This coincided with the Cboe Global Markets Inc Bitcoin futures launch. Cboe has introduced measures against wild swings in its futures contracts. Since the spot rate has a close correlation to the futures rate, wild swings might become a thing of the past.
Crypto-investors are looking for other coins to trade and what better coin to trade (which is also easily accessible) other than Bitcoin’s little sibling? In Charlie’s words — “Just for fun… I wanted to create silver to bitcoin’s gold.”
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BTC : 395JpxqaQLVYP2cP4uVMDBPPArdtdKBfZk
BCH : 181FSPLrFWVK3Tpfmev678pLrUa2KPeoFh
LTC : LgJw5vJo2ExXFTQaWuLJVbRtqDiscXNG7U
ETH : 0x4c7195E074cf0Ab6F77Bdb7C97Fd2567066Bb712
IOTA : QNRFWZROPTRTZRGOYGAPXCKOFMNANIZIMYJASSDEMUIGZXUSB9EYDAJM9EFDGZZDOGOBQPTGRCLQIXPAI
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