With the rough week the market took LiteCoin’s fundamentals are showing some signs of strain.
Litecoin (LTC) has not been immune from the broader market’s troubles this week. LTC started out promisingly at the outset of the week posting a solid US$297.57 before falling hard to US$224.50 by midweek. LTC has since regained the middle ground and has settled more comfortably at US$263.81, representing an 11.34% reduction in value since midweek readjustments.
LTC market cap performed in line with price differentials, shedding roughly 11% from the weeks beginning which stood at US$16.2 billion. Following that, LTC’s market cap fell by a large margin to US$12.2 billion and regaining the middle ground to hold a respectable US$14.4 billion market capitalisation against all other cryptocurrencies.
Trade volume has shown some surprising data this week starting the week with unusually high volumes of US$2.24 billion worth of trades being made in the LiteCoin cryptocurrency. What is strange is that usually around periods of volatility, much like LTC experienced in midweek trading, there is also a large fluctuation of trade volumes that accompanies price swings.
For LTC during the midweek volatility there was no such large increase in trading volumes. Trading volume by midweek and up to the time of writing has remained subdued at about an average 24-hour trading volume of US$1 billion.
Even stranger, the average price of transaction fees reduced over midweek trading and even after trading volumes in LTC had settled, fees then began to increase. That increase has been from an average transaction fee of US$0.26 rising to US$0.35.
Some investors may be disgruntled to read this, but caution is advised trading LTC., particularly over the long term. The reason for this is that as a form of currency LTC seems to be performing less and less impressively as time goes by.
As was noted in the last weekly analysis, LTC has been relatively stable when compared to other leading cryptocurrencies. While this is still true, Ripple (XRP) is now more likely to beat LTC in that regard.
It is puzzling to ask what LTC can be used for if not being widely used as money. The trouble for LTC as a contender to become used as money is that rising transaction fees cripple its potential for everyday use.
As at the time of writing on 14 January 2018, there are 267,000 active LTC wallet addresses. Compare this to the market leader of active wallet addresses, Ethereum, which has 886,000 active wallet addresses. LTC must improve in that metric if to be considered a genuine form of money.
If that occurs there is no telling where its price might increase to. If not, at some point there will be strong downwards pressure on LTC.
This information should not be interpreted as an endorsement of cryptocurrencies or a recommendation to invest. Historic performance is no guarantee of future returns. As an investment class, cryptocurrencies are speculative investments and investing in cryptocurrencies involves significant risks – they are highly volatile, vulnerable to hacking and capital loss and sensitive to secondary activity. Before investing you should obtain advice and decide whether the potential return outweighs the risks.