Litecoin (CCC:LTC-USD) is a cryptocurrency that’s starting to rebound. In fact, it’s now up by 33% as of Jun. 16. Currently at about $168, it has dropped significantly from its peak. However, there are good indications that Litecoin could rebound close to its former highs.
At one point, Litecoin was at a close as high as $386.45 — just over a month ago, on May 9. So, it is off over 56% from that price. But the crypto is actually up 17% from its low-point close of $143.52 on May 23. This is a good start.
Basically, this shows that the cryptocurrency is not going to melt down as so many feared when the crypto crash occurred back in May. Maybe it was just a case of sell in May and go away, until a better day. Now, that better day is starting to emerge.
Litecoin’s Standout Features
One of Litecoin’s chief features is that it has been around a long time. Launched in 2011, the crypto was intended to focus on peer-to-peer (P2P) transactions. LTC’s founder, Charlie Lee, was a former Google (Alphabet (NASDAQ:GOOG)) employee who wanted to make a better “cryptocurrency for payments based on blockchain technology.” Lee wanted Litecoin to process money transfers much quicker than Bitcoin (CCC:BTC-USD).
As one analyst reports, Lee was originally trying to change aspects of BTC’s rules “to make it faster and cheaper” to use. However, his actions were so controversial that a rift occurred. As a result, Bitcoin split into two in November 2011 and the new LTC crypto was born.
However, one major difference between these two cryptos is that Bitcoin can only have 21 million coins outstanding. Litecoin, on the other hand, is designed to allow 84 million coins in existence. The idea here was to give it more liquidity and therefore, theoretically, more usability as a medium of exchange.
As a result, Bitcoin has a tighter, more restricted supply float. For example, Bitcoin has 18.74 million coins mined and in existence, or a little over 89% of the total allowed supply. By contrast, Litecoin has 66.75 million tokens mined or just over 79% of its total allowable supply. As a result, Bitcoin now has a market capitalization of about $733 billion compared to Litecoin’s $11.2 billion market value.
Another major feature of Litecoin is that it reportedly takes much less time to confirm a blockchain transaction. The average time for Bitcoin transactions to be confirmed is about 9 to 10 minutes. The average time for Litecoin transactions, however, is just 2.5 minutes. According to some, this makes LTC much more attractive to merchants.
What to Do with Litecoin
As it stands, Litecoin is the 12th largest cryptocurrency in terms of market cap. This makes it quite liquid and yet not as restricted in supply as Bitcoin. That may or may not be a good thing. After all, the Bitcoin price has benefited from a “squeeze” effect due to its restricted supply.
Moreover, in terms of performance, LTC has slightly underperformed BTC in the past year. A year ago, it was at $43.88. This means that it has risen about 283%. By contrast, Bitcoin is now close to the $40,000 mark again, but a year ago it was at $9,538. That implies a return of 309% at its current price. However, the two have crossed over in terms of leadership in the past year. So, in effect, you would be better off with either one, depending on your entry point.
That said, I suspect that given its natural affinity with Bitcoin, Litecoin’s correlation to the large crypto is very high. This implies that if Bitcoin rebounds during the rest of the year, you can expect Litecoin to rebound, too. This is another major reason to own LTC for the long term.
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On the date of publication, Mark R. Hake held a long position in Bitcoin. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
