Litecoin (LTC) won the weekend. The digital token surged up by 34%, flying past the $60 mark to hit a high of $64 on Sunday. When markets opened, it was back in the $62 range.
Since the start of 2017, Litecoin is up by over 1,300%:
In all fairness, it’s worth noting that this isn’t the first time Litecoin has hit these kinds of milestones.
Litecoin hit $50 in November of 2013 before falling dramatically.
Now the “silver to Bitcoin’s gold” appears to be making a comeback. For the token, $64 is an all-time high. And at the time of writing this, Litecoin is up 7% since market open.
Why Is Litecoin Surging?
When trying to isolate factors behind a token surge, I often turn to trading volume.
In Litecoin’s case, a closer look at trading volume reveals heavy demand for Litecoin from Korea, with a bulk of Litecoin trading happening on Korean exchanges Bithumb and OKCoin. We saw a similar trend last week with Korean exchanges claiming 70% of Ripple’s (XRP) trades when the digital currency shot up by 44%.
Yet, this trading volume from Korea doesn’t necessarily mean that the Koreans know something the rest of the market doesn’t (A popular speculation on many a forum).
Rather, recent regulatory changes have made it easier for Korean citizens to buy digital assets. That said, the digital currency market has seen an influx of demand from Korean exchanges.
South Korea has become a powerful player in the digital currency market, controlling 16% of the globe’s total Bitcoin transactions. There has also been a surge in its demand for other currencies, including Ethereum (ETH) and Litecoin.
In Litecoin’s case, the surge can be attributed to more than just Korea and regulation…
You see, Litecoin is very similar to Bitcoin with its ability to operate as a decentralized currency and as a peer-to-peer exchange system. If you want to learn more about the specifics, you can check out our full Litecoin guide here.
Litecoin may be better equipped than Bitcoin to meet the needs of our global financial system, processing transactions in 2.5 minutes compared to Bitcoin’s 10 minutes.
And that positions the currency to move alongside its peer.
And a closer look at trends shows that Bitcoin and Bitcoin Cash (BCH) might actually help spur Litecoin demand.
Let’s take a look…
The Bitcoin Fork and Litecoin: What It Means for Litecoin’s Future
For those of you who are new to the digital currency world, Bitcoin experienced a fork in August that produced a token called Bitcoin Cash.
After Bitcoin Cash became available (and even before), Bitcoin’s price began to surge. Litecoin followed suit, nosing past $50 in August.
The likely reason why these two tokens surged at the same time is simple: Litecoin is compatible with Bitcoin. And it’s also competition for Bitcoin Cash.
Though it’s hard to prove directly, it appears that many investors who acquire Bitcoin Cash through the fork are liquidating it for other digital currencies.
Here at Wealth Daily, we call this behavior coin jumping. And if done emotionally, it can be detrimental to long-term profits.
It’s hard to prove that investors are actually coin jumping — there are so many factors in the digital currency market that influence rise or fall. But this chart shows a correlation between the Bitcoin Cash drop and Litecoin’s surge:
Experts are speculating on the correlation. Prominent Bitcoin analyst and investor Tuur Demeester considers Litecoin a real Bitcoin hedge. Furthermore, Demeester stated that:
If BCH pump fails, money could roll into LTC, it being a real Bitcoin (BTC) hedge. I just invested some BCH profits into LTC. With real “Bitcoin hedge” I mean [that] Litecoin has SegWit and it will likely merge other cutting edge tech ahead of BTC.
This means as more people sell of Bitcoin Cash, Litecoin could benefit.
Where Does This Leave Litecoin Now?
From this point, Litecoin could continue to move alongside Bitcoin for a few reasons.
SegWit is alive on both the Bitcoin and Litecoin networks, allowing for cross-network swaps. This is beneficial for investors who are looking to exchange litecoins for bitcoins (or vice versa) quickly.
In the past month, Litecoin has seen increased interest from Korea and China. If this interest continues, Litecoin is positioned for continued growth.
Beyond that, if more investors choose to liquidate Bitcoin Cash funds for litecoins and bitcoins, there will be a big catalyst for growth on the horizon.
Coinbase, one of the biggest holders of Bitcoin funds, plans to release Bitcoin Cash to its investors in January 2018.
These investors could then turn and liquidate BCH, pushing the price of Litecoin and Bitcoin even higher.
All of this is speculation, but Litecoin’s future appears bright.
Seeking Alpha even jumped on the Litecoin wagon, publishing research supporting Litecoin’s value.
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