Halvening Halves Litecoin’s Hash

Litecoin’s hashrate has fallen by some 40% following a reduction in block rewards from 25 LTC to 12.5 LTC per block.

It’s hashrate (pictured above) has dropped from more than 520 terahashes per second on the 14th of July, to now 300 thash/s.

That’s after its halvening on August the 5th which led to an inverse price action from what you’d expect.

Litecoin slowly rose to then mini-jump and dump in April, followed by halvening hype until the 22nd of June when it reached $150, up 5x from the low of $30.

Since then it has only known down, halvening in price to now about $70 at the time of writing.

Making it somewhat unclear whether this did in fact have anything to do with the halvening, or whether that narrative just gave it an excuse to follow bitcoin’s up and downs.

That’s because where supply is concerned, it needed another month+ to change. Demand, however, is the other side of the equation, and that can depend on many more factors than changes in supply.

This fall in hash does not seem to be a problem for litecoin because no one really uses it with just 25,000 transactions a day.

Were the same to happen in bitcoin, however, it could cause congestion as difficulty adjusts every two weeks.

Meaning for about two weeks it would be more difficult to find blocks, thus block times would rise, thus less transactions would fit in, sending fees up with price remaining the unknown factor.

Unknown because demand can depend on a lot more than the inclusion fee, with price temporarily perhaps not accounting it at all.

At least that was the case for bitcoin in late 2017, with the currency previously not quite reacting prior to the halvening presumably because everyone sort of expects it to in order to price-in an event well known for years.

After the halvening, however, bitcoin’s price tends to rise as new supply is reduced in the market, but for litecoin the opposite has happened.

That may well be because there is no real demand for LTC as the coin is not even being developed.

While for bitcoin there does appear to be actual usage beyond speculation. Usage that tends to primarily concentrate in bitcoin as it is the most liquid, the most widely acceptable, and the best known.

Such usage varies. From Snowden buying a VPN, to Venezuelans taking their savings out in a non-seizable way, to immigrants sending money back home and much else.

Because of this usage, what applies to bitcoin tends to not quite apply to other cryptos which usually do compete with bitcoin primarily and then fiat.

Thus it is not necessarily the case that bitcoin too will rise prior to the halvening, and also fall prior to the halvening, in a speculative front-running.

It may, of course, but it’s not easy to move bitcoin, or at least not as easily as LTC. So it may well be the case price in bitcoin will correspond in time to plain supply and demand, but we’ll see this spring.

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