If you're bored of waiting for bitcoin (CRYPTO: BTC) transactions to be confirmed and transaction fees are eating up the majority of your income, Litecoin (CRYPTO: LTC) is the most appropriate option for you. However, the thumb rule of crypto trading is to research the coin before investing. This article can be a start for getting to know LTC, but you must do a thorough analysis to master the art of Litecoin trading.
As you have clicked this title, we assume that you have good enough knowledge about cryptocurrency and how it works. We are going straight into the nitty-gritty of Litecoin trading.
What is Litecoin?
Litecoin (LTC) is the world's 21st largest cryptocurrency in market cap. It is a P2P cryptocurrency and an open-source project distributed under the license MIT/X11. The concept of Litecoin was established by former Google engineer Charlie Lee in 2011 to overcome some of the rigorous difficulties of bitcoin and function as a lighter version of bitcoin. Litecoin uses the proof-of-work principle and employs Scrypt for hashing function.
Despite its 2013 inception, Litecoin's bull run began in early 2017. Throughout the year, the price of 1 LTC increased from $44 to about $224, making holders more than 400% wealthier. However, 2018 was not a very bright year. LTC's chart plummeted below $30 per coin. Again, it increased by 300% the next year. Following multiple dips and climbs, LTC reached an all-time high of $270 during the March-2021 crypto boom. As of this moment, the price is $144.90.
The promising forecast does not make one a skilled trader, but the reason behind the forecast does. The price of LTC is meant to rise in the year 2022 for apparent reasons. We shall discuss these reasons briefly to provide you with a gist of LTC market parameters:
1. Follows Bitcoin Price Chart
As we have explained previously, LTC was developed to serve the function of a lighter counterpart of BTC. Accordingly, a strong correlation between the price chart of both coins has been noticed in the past several years. However, Litecoin's price could not go as high as bitcoin for various reasons, although the slumps and climbs of the two coins are observed to be well-synchronized. Therefore, LTC will increase as long as BTC, the biggest cryptocurrency by market size, dominates. Furthermore, Litecoin, like Bitcoin, has a supply that is burnt by half every few years. It helps maintain a balanced supply/demand curve for LTC coins, with a bit of upward bias as the quantity of Litecoin tokens decreases.
2. Latest Updates About LTC
New facilities and features are always a game-changer for any investment market. LTC has a piece of news that is good enough to shake its price chart and turn the curve steep. Litecoin recently announced through Twitter that it was collaborating with VISA (NYSE: V) to launch a Litecoin debit card. The card will accept Bitcoin, Ethereum, Ripple, and Litecoin. The only card that remains in Litecoin is the virtual card. At the moment of purchase, the Litecoin balance is converted to a value sufficient to pay the transaction cost with the merchant. This payment mechanism is anticipated to be used by 50 million retailers worldwide.
Litecoin Trading Strategies
1. Analyze & Explore
Before making any LTC investment:
- Observe the price chart of the last 7 days to get a clear idea of the current direction of volatility.
- If the market direction is not clear, do not make any moves.
- Wait a few days and go through the charts again.
There are many tools for analyzing price chart patterns to project rises and declines that allow you to purchase and sell-off accordingly.
2. Avoid Panic-Selling
The market may decline far more than your expectation for a concise time interval. If it happens, stay calm and try to understand the reason behind the sharp slump. Do not just panic sell without proper reason. It is a widespread mistake for beginner traders these days. It only makes the situation worse. Avoiding such impulsive decisions will come in handy for your long-term trading career.
3. Stop Swing Trading
The Crypto market is more volatile than forex, stocks, and all the other investments. It's not for light-hearted folks. You may profit by buying and selling tokens in the same day/hour by keeping an eye on the price chart, but it will be of no use in the long term. Therefore, always make prudent decisions supported by logic and analysis.
The cryptocurrency market is volatile as always, and Litecoin is no different. Always do your own research before putting your money on any crypto. Never blindly follow blogs or tutorials for putting your hard-earned money on a cryptocurrency, no matter how profitable it seems.