Analyst: unlike Litecoin, Bitcoin’s halving will have a significant effect on its price

Cryptocurrency analyst @100trillionUSD pointed out that the premise that Bitcoin’s halving won’t have a significant effect on its price because Litecoin didn’t jump after its own is fundamentally wrong. The analyst said that unlike Bitcoin, Litecoin’s price doesn’t have a significant relationship with the stock-to-flow ratio, which makes its halvings less relevant to its price.

Litecoin halvings have very little effect on its price

With the halving of Bitcoin slowly approaching, many cryptocurrency analysts and experts have voiced their opinions on how the quadrennial event will affect the price of the world’s largest cryptocurrency. While most Bitcoin maximalists believe the reduced supply left after the halving will only increase demand due to the coin’s scarcity, there was a strong current of skeptics that claimed the halving would be detrimental to its growth.

The example of Litecoin was used to illustrate this. As the coin experienced its second halving on Aug. 5 and its price remained unchanged, many said that Bitcoin’s own halving would also have very little effect on its price.

However, prominent Twitter cryptocurrency analyst PlanB claims this logic is flawed and offered an interesting comparison between Bitcoin and Litecoin to show that BTC’s halving would have a significantly different outcome.

The analyst pointed out that unlike Bitcoin, Litecoin’s price doesn’t have a significant relationship with its stock-to-flow ratio. Stock-to-flow is the total amount of a commodity that is held in inventories, divided by the amount produced annually.

Stock-to-flow ratio shows a bleak future for Litecoin

When speaking of cryptocurrencies, stock-to-flow is calculated when the total number of coins in circulation is divided by the number of coins created in one month, and then divided by 12. The value is used to calculate how many years are needed to produce all the coins currently in circulation, with the higher number indicating a higher scarcity.

According to a series of tweets by PlanB, Bitcoin has a strong stock-to-flow ratio. Apart from that, Bitcoin also has a strong relationship with the predicted stock-to-flow value. The analyst said that the 2012 stock-to-flow model is still “working fine” and will continue for some years to come.

Litecoin, on the other hand, doesn’t seem to have any relationship with the stock-to-flow ratio, the analyst pointed out.

While he said he wasn’t sure why this was the case with Litecoin, several theories popped up during the Twitter discussion. PlanB said that the lack of network effects such as on/off ramps, futures, options, and liquidity could be what caused Litecoin’s value to remain stable even after the halving.

Others said reduced block rewards combined with lower prices pre-halving caused Litecoin miners to leave en masse. The lack of profitability means less network use, and the only supporters that remain are hodlers that don’t cause massive price fluctuations.

Whatever the case is, many members of the crypto community seem to have lost their faith in Litecoin. While the halving might not have affected its price, Litecoin will have a tough time protecting itself from the lack of support in the industry.

Bitcoin, currently ranked #1 by market cap, is up 0.33% over the past 24 hours. BTC has a market cap of $172.67B with a 24 hour volume of $11.45B.

Chart by CryptoCompare

Bitcoin is up 0.33% over the past 24 hours.

Filed Under: Analysis, Bitcoin, Litecoin, Price Watch

Priyeshu Garg

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in Computer Science Engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving the transportation problems at his company, he can be found writing about the blockchain or roller skating with his friends.

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