Litecoin, the silver to Bitcoin’s gold, had recently gone through the block halving event, resulting in extreme price swings.
The cryptocurrency market, in general, is highly correlated, with most crypto assets following Bitcoin’s price movements. However, network-specific events like the block reward halving introduce individual price variation action.
If the block halving saw Litecoin deviate from the rest of the market, it looks like its correlation to Bitcoin is increasing once again.
Litecoin Halving Event
For Litecoin, the halving took place in August when the block reward for miners dropped 25 to 12.5 LTC. Built into the code of Litecoin, Bitcoin, and other Proof-of-Work coins, the event creates forced scarcity in the market.
With less LTC to go around, and less being rewarded to miners, the value of each individual asset should increase. Investor interest in the coin peaked in the lead up to the event. If at the beginning of 2019, LTC was around $30, prices hit $150 in late June as investors speculated on the coming reduction of the supply emission.
However, rather than a further price spike, the market for LTC reversed, sending both its price and hashrate into a downward spiral, as BeInCrypto has previously reported. As data suggests, the halving speculation ride has sent BTC and LTC different ways, and the correlation between the two assets has decreased significantly.
Correlation Increasing Again
Two months after the halving, most recent data points indicate that over the past week, the correlation between Bitcoin and Litecoin has picked up again, increasing from 0.7 to 0.93.
In the last 7 days, the correlation to Bitcoin went up from 0.7 to 0.93
— intotheblock (@intotheblock) October 3, 2019
If the block reward halving has thrown the Litecoin network into a rollercoaster, it looks like it is starting to stabilize alongside hashrate and price.
Prices in the cryptocurrency space are susceptible to major milestones and events around individual networks. With the Bitcoin halving right around the corner, everyone will be closely monitoring how the price action develops, and whether altcoins like Litecoin will be able to follow the market leader.
What do you make of the increase in the correlation between the two assets? Did the Litecoin network stabilize, or is this only temporary? Share your thoughts in the comments!
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