The LTC price is way higher than it was last week—here's why.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Over the past week, Litecoin has experienced unprecedented growth—logging a 333 percent increase in just five days, including a 9-hour 38 percent increase starting Thursday night (PST), another 29 percent jump on Sunday, and a 73 percent bull run Monday night. As of this writing, the price is $321.20 (CoinMarketCap).
But amid all this insane growth, many are left wondering, what's causing it? Here are five reasons.
1. Bitcoin Growth & Futures Trading
- Increased activity in Bitcoin, due in part to futures trading, is trickling down to Litecoin and other cryptocurrencies.
- The increased Bitcoin activity is driving up transaction fees and clogging the network, potentially sending users in the direction of Litecoin.
Especially as network speeds lag and transaction fees soar on Bitcoin, Litecoin may be an appealing trading alternative with its faster speeds and lower transaction costs.
2. Massive Influx of Users on Coinbase
Coinbase, the popular cryptocurrency brokerage, is adding around 100,000 new users per day, recently surpassing YouTube as the #1 app on the Apple App Store. Coinbase only supports three cryptocurrencies: Bitcoin, Ethereum, and Litecoin.
As mentioned, the positive relationship between BTC and LTC might be playing in the latter's advantage—drawing fresh eyeballs to the most popular crypto exchange on the planet. Many of these users also aren't tainted by the remorse of not buying LTC when it was in the single digits right before their eyes.
3. Buyers Are Beginning to Understand Litecoin
As more people buy into cryptocurrency through Bitcoin through sites like Coinbase, it becomes much clearer to see how Litecoin's speed and low fees are a benefit to them.
Especially when using a service like Changelly, which allows users to convert many cryptocurrencies directly to others (rather than having to trade for BTC or ETH and then into the desired cryptocurrency)—LTC offers a unique advantage in its speed. And while there are certainly other options in this general category, none are on Coinbase.
4. Inexperienced Buyers
Many of these buyers flooding Coinbase are buying due to the FOMO ("fear of missing out") that the current crypto-craze is generating, possibly causing erratic buyer behavior—often in the direction of purchasing rather than waiting or selling.
These buyers choose speed and convenience over diligent research of options—meaning they tend to buy in at the highest possible price, which further drives the number. Meanwhile, even experienced buyers are making the choice to go in heavier on LTC in hopes of profiting off of the current surge.
5. Charlie Lee, Social Media, & Press
Litecoin creator Charlie Lee, already a notable presence in the blockchain world, has recently undertaken something of a media blitz, appearing on both CNBC's Squawk Alley and The Glenn Beck Program.
Reminiscent of the buzz around Ethereum that skyrocketed Ether prices from around $90 to around $410 in the spring, many mainstream outlets have begun actively covering Litecoin news, generating more visibility for the cryptocurrency.
Between the above, and the general fervor around cryptocurrencies in general right now, social media activity is soaring, with a new crop of "Hodlers" extolling the merits of LTC.
So, will the current growth rate last? Market trends indicate an inflationary period with a growth rate that is ultimately unsustainable. Charlie Lee himself has cautioned buyers to expect a "multi-year bear market," in which LTC could drop to $20.
On the other hand, cryptocurrencies in general are still nowhere near mainstream saturation, and given the role Coinbase plays in ushering in new participants, there's also an argument that Litecoin will experience plenty more expansion before simmering down.
Editor’s Note & Disclosure: The author participates in cryptocurrency markets. Neither the author nor Forbes endorses participation in any token sale or cryptocurrency investment, all of which have significant inherent risk. Seek advice from a financial advisor as well as do your own due diligence before considering investment.
