Litecoin’s blockchain is set to undergo a mining reward halving in August this year, as it is programmatically designed to do so after every 840,000 blocks are mined or roughly once every four years.
The process is aimed at controlling inflation by reducing the rewards for mining on the blockchain from 25 coins to 12.5 coins and seems to have put a strong bid under the cryptocurrency.
Litecoin has scored gains in each of the previous four months – its longest monthly winning streak since August 2017. Prices rallied 3.8, 46.3, 31.15 and 22 percent in January, February, March and April, respectively, according to CoinDesk data.
Why does the halving matter?
Associating litecoin’s rally with the reward halving makes sense as the process results in reduced production of the cryptocurrency’s supply. Miners will be earning 50 percent fewer coins for every block mined after August and will be adding significantly fewer litecoins to the software’s ecosystem, possibly leading to supply deficit.
Markets are always forward-looking and tend to price in such demand/supply-altering events often times several months in advance.
Backing that argument is historical data which shows the price of litecoin had rallied sharply in seven months leading up to its first reward halving, which took place on August 25, 2016.
The process is aimed at controlling inflation by reducing the rewards for mining on the blockchain from 25 coins to 12.5 coins and seems to have put a strong bid under the cryptocurrency.
Litecoin has scored gains in each of the previous four months – its longest monthly winning streak since August 2017. Prices rallied 3.8, 46.3, 31.15 and 22 percent in January, February, March and April, respectively, according to CoinDesk data.
Why does the halving matter?
Associating litecoin’s rally with the reward halving makes sense as the process results in reduced production of the cryptocurrency’s supply. Miners will be earning 50 percent fewer coins for every block mined after August and will be adding significantly fewer litecoins to the software’s ecosystem, possibly leading to supply deficit.
Markets are always forward-looking and tend to price in such demand/supply-altering events often times several months in advance.
Backing that argument is historical data which shows the price of litecoin had rallied sharply in seven months leading up to its first reward halving, which took place on August 25, 2016.
