Litecoin (LTC) rose to become the fourth-largest cryptocurrency by market capitalization last week. It surpassed EOS and Bitcoin Cash after gaining more than 30% over the week.
Litecoin rises to the 4th-largest cryptocurrency
After falling below the psychological $30 level on January 13, 2019 amid the broader crypto market downturn, Litecoin (LTC) has rebounded and is now trading around $45.
Let’s examine Litecoin’s technical outlook.
The LTC/USD pair traded in a range between January 10 and February 8. Toward the end of last week the pair showed a clear acceleration upward.
Moving from $34 to $42 on Friday, the pair gained more than 20% in a single trading day. That day it broke out of the range to the upside and is now heading toward resistance near $50.
Litecoin’s price action suggests a generally bullish market structure, especially when compared with several other major cryptocurrencies. Many of those digital assets have been unable to surpass their January highs or establish new peaks.
However, Litecoin’s recent rally allowed it to exceed its January high—previously around $41.19 reached on January 8—which had acted as a key resistance level.
By rising above that level, Litecoin moved ahead of EOS (a competitor to Ethereum) and Bitcoin Cash (a derivative of the original Bitcoin) in market capitalization. The Bitcoin “little brother” has therefore climbed into fourth place among the largest digital currencies.
Why did Litecoin accelerate so strongly?
The price acceleration followed an announcement from the Litecoin Foundation and Beam, a software development company with its own cryptocurrency, that they are exploring implementing the Mimblewimble protocol.
Named after a spell from the Harry Potter universe, Mimblewimble aims to improve privacy and scalability on a blockchain by limiting the disclosure of transaction details.
“We have begun exploring the possibility of adding privacy and fungibility to Litecoin,” the Litecoin Foundation wrote. “This could be achieved by enabling on-chain conversion of LTC to a Mimblewimble variant and back again. With this conversion, it will be possible to transact with Mimblewimble LTC privately.”
Fungibility
Charlie Lee has said the Litecoin blockchain will focus this year on improving fungibility through more private transactions. In a tweet he noted that fungibility is a key property of a healthy currency that both Bitcoin and Litecoin lack, and that after resolving scalability debates, the next focus will be fungibility and privacy.
Privacy
Privacy remains an important feature for many cryptocurrency users. Litecoin’s prospective work on Mimblewimble could allow, for example, encryption of transaction amounts and other privacy-preserving features.
Other cryptocurrencies already prioritize privacy, such as Monero (XMR) and Zcash (ZEC).
Should you buy Litecoins?
With the recent price surge, LTC could continue rising toward the $50 resistance. Several upcoming initiatives and developments appear promising, with a focus on improving network security and user privacy.
Another important factor is Litecoin’s upcoming halving, the pre-programmed reduction of miner rewards. The Litecoin block reward is scheduled to halve from 25 to 12.5 LTC on August 8, 2019. Bitcoin halvings have historically had a positive effect on BTC prices, so a similar market response for Litecoin cannot be ruled out.
If you plan to buy LTC, there are several options. You can use brokers offering crypto-based financial products that let you gain exposure without holding the underlying coins, or you can buy and HODL actual coins on cryptocurrency exchanges.
Popular exchanges where you can purchase and store LTC include major platforms that support trading and custody. If you are unsure about how crypto investing works in your country, consider reviewing regional guides and regulations before proceeding.