Traders give up on LTC but why do investors hoard?

Litecoin has had a tough year and is now 51% down on altcoins in the past 12 months. The lack of GitHub activity and the planned protocol upgrade led Litecoin co-founder Charlie Lee to admit 2019 saw historic lows in the number of developers working on Litecoin Core (the software that operates the node. network).

Early 2020 is no different and Charlie Lee asks the LTC miner to make a voluntary donation to help drive development funding. Uncertainties about Litecoin’s future have caused investors to lose interest in the project and are reflected both online and in the LTC transaction metrics.

What’s interesting is that some people are silently hoarding LTC.

LTC trading volume fell to a 2-year low

Volume is the most relevant indicator to reflect the interests of traders and LTC has failed miserably in this area. Trading volume on major exchanges has been on a downward trend for the past 12 months and has recently hit its lowest level in 2 years.

30-day average LTC volume | Source: TradingView

LTC ranks 3rd in terms of transparent trading volume on Nomic at $ 80 million per day. This is 50% higher than BCH and EOS but 45% lower than 11 months earlier when there was an average of $ 146 million in daily volume.

There are many reasons for drastic change, and it should be noted that even less activity happening on the exchange does not mean less use of blockchain.

On-chain metrics provide practical insights into transfers, fees, active addresses and many other useful metrics of interest to traders.

Adjusted remittance value

Remittance value is the leading on-chain metric measuring user activity as it adds up all the coins moved daily. CoinMetrics analysis provides more accurate data by tailoring these metrics to exclude mixers and transactions of the same entity.

Daily LTC Adjusted Money Transfer Value (14-day Average) | Source: CoinMetrics

The adjusted daily remittance value fluctuates around $ 20 million, 83% lower than the 2019 peak. Current levels are comparable to XTZ, a much newer and much smaller cryptocurrency with the case. Primary use has nothing to do with fast or cheap deals.

Significant reduction in transaction fees

Charlie Lee proposes a shorter block period than Bitcoin and a simpler algorithm that removes signatures from the original data for higher transaction yields.

According to Luke Childs ‘How Many Confirmations’ analysis, such a move could bring significant interest to LTC in the past but fade away as users realize the need for 270 validated to match the 3-block Bitcoin mining power.

Average fee per LTC transaction (average 14 days – USD) | Source: Coinmetrics

The average LTC fee per transaction has dropped to $ 0.011, the lowest level since October 2015. Although there are many reasons like 75% use SegWit but previous daily remittance value analysis showed that the demand of users is not high.

While most of the average Bitcoin block size exceeds 1.2 megabytes, the LTC averages less than 0.2 megabytes even though they both have similar capacities.

Low usage means less fees, a decrease in miner profits, and lead to a negative feedback loop when investors notice the processing power behind each blockchain.

Decreased hashrate

LTC hashrate | Source: CoinWarz

The LTC hashrate has decreased by 45% since the halving in October 2019, often raising concerns about 51% attacks. Theoretically, it can be used to compete with honest miners.

Investors are hoarding instead of dumping LTC
After so many negative indicators, readers will probably think that owner activity is also weakening because both price and network usage tend to decrease for more than 1 year.

Furthermore, recent code advances have been near zero, including the proposed MimbleWimble technology security in October 2019.

Age UTXO LTC not yet spent | Source: Investificar.com.br

Curiously, this speculation is incorrect as 63.8% of the LTC supply remains untreated in the past 12 months. In fact, this is the highest ever.

According to the Hodl Wave chart above, also known as the UTXO age distribution chart, the percentage of money that is not moving is increasing at an extraordinary rate.

The number of coins not moving for 12 months or more in early 2020 stands at 56.7%. This 7% difference is held by the long-term investors currently worth $ 209 million, enough to get 30% of the entire supply of DASH.

There is no way to find a reason for a hoarding, but its impact on circulating supply is positive.

Recently, investors have been speculating about Litecoin’s potential integration with ADA and if true, this could be a bullish factor for LTC.

There is also the possibility of leaning on the general crypto market bull trend and as investors start to tumble about the ‘alt season’, LTC will pump strongly and long term investors tend to limit selling. at the dawn of time.

Leave a Reply