It’s a bloodbath out there, folks.
As predicted, the Litecoin news coming out of China has wreaked havoc on its price, driving the Litecoin to USD down about 31.73% to roughly $38.10.
Litecoin hasn’t traded at these levels since the start of the summer, when it was riding high on a spectacular ascent. Even a week ago, it brushed new all-time highs.
However, much of that optimism was blunted by the Chinese government’s crackdown on domestic cryptocurrency exchanges. The story came out in dribs and drabs, sucking out confidence in the market like a leech.
Smaller exchanges were the first to pack up, but now some of the bigger exchanges are closing their doors as well. For instance, ViaBTC and BTCC, two major hubs for cryptocurrency trading, will be shuttered by the end of September.
Apparently, Shanghai’s Municipal Finance Service Office issued a verbal warning to all exchanges. It also gave the end of September as a deadline. Investors took this news as a reason to pack up and head for shelter.
Litecoin lost almost 50% of its value over a seven-day stretch.
That said, the two biggest Litecoin exchanges in China, OKCoin and Huobi, are still operating as if nothing ever happened. And according to Litecoin’s founder, Charlie Lee, the two exchanges are meeting with regulators today.
The outcome of that meeting will shape the Litecoin price forecast for the next two years.
I’ve heard the argument that China is not closing the exchanges permanently, but suspending them until tighter oversight is implemented. It’s not an unreasonable theory.
After all, China’s crypto community added more than trading volume to the market, they added the computers and hashing that power the network. Those resources would go to waste, and the Chinese government isn’t a fan of waste.
It is, however, a fan of power and control. Suspending the exchanges this abruptly and reconstructing them under a rigid framework sounds entirely plausible to me.
Also, the Communist Party is reshuffling the upper deck of its leadership next month. It certainly doesn’t want a ton of financial volatility in advance of that Game of Thrones-esque power struggle.
In either case, the best idea is to set a Litecoin price forecast below what you’d “buy the dip.”