Roughly four months after Litecoin halving, its difficulty ribbon is recovering following the worst miner capitulation in its 9-year history. According to Willy Woo, an on-chain analyst, LTC bulls are likely to gain against BTC, breaking out from the bearish channel, despite the resurgence in the world’s most valuable coin price.
Litecoin (LTC) At Sixth
Litecoin Difficulty Ribbon now in recovery. Should setup a bullish breakout of the bearish channel. I wouldn't be surprised if LTC to leads a bullish breakout of BTC. pic.twitter.com/DRJ5AT65fk
— Willy Woo (@woonomic) January 6, 2020
Litecoin is lodged at sixth in the market cap leaderboard. However, this is a depreciation and before halving, the coin surged, breaking into the top 4 at the back of increasing trading volumes and expectation of higher prices after the scarcity shock of Aug 5, 2019.
On that day, Litecoin halved its block reward from 25 LTCs to 12.5 LTCs. But, unlike previous cycles observed in BTC, LTC prices peaked and plummeted a few weeks later.
Considering the incentivization mechanics in Proof of Work algorithm system, hash rate follows price. Because of falling prices, hash rate fell in tandem, forcing some miners to shut down their machines as mining was no longer profitable.
Miners Will Shut Down
The co-founder of one of the largest mining pools, F2Pool, had earlier expressed his concerns saying falling LTC prices couldn’t cover the high cost of electricity. As such, some mining pools like L3+ would have no choice but to close businesses right away.
However, its co-founder, Charlie Lee, tried to waylay fears, suggesting that the network’s difficulty will re-adjust. He added that despite a dip in hash rate if miners shut down, there will be no lapse in time and block generation will remain at 2.5 minutes.
“When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For Litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine.”
Bitcoin Halving Less than 5 Months Away
Bitcoin will halve in May 2020, and if electricity costs remains highs in such a way rewards won’t offset operational cost, it is probable that some miners will shut down, negatively impacting Bitcoin’s hash rate. Falling prices would in turn be a boon for LTC and other altcoins.
At press time, LTC is yet to register meaningful gains against the resurgent Bitcoin. It is changing hands at 5,740 Sats.
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Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies and enjoys the opportunity to help educate bitcoin enthusiasts through his writing insights and coin price chart analysis. Follow him at @dalmas_ngetich