Litecoin News of the Day
Despite investors shoveling money into cryptocurrencies, Litecoin prices were downbeat on Wednesday morning.
They fell 2.8% overnight, bringing the Litecoin to USD exchange rate to $54.89. At the same time, the Litecoin to Bitcoin rate fell 7.79%.
Apparently, currencies need some version of “Bitcoin” in their names in order to get investors’ attention.
If you think that’s an exaggeration, visit CoinMarketCap.com. There are only three currencies in the top 10 that made gains: Bitcoin, Bitcoin Cash, and BitConnect. All the rest of the biggest cryptocurrencies by market cap—Litecoin, Ethereum, Ripple, NEM—have flashing red numbers beside their names.
This kind of herd mentality happens often. For instance, there are records of stocks gaining +200% simply because the company changed its name to include the word “blockchain” or “Bitcoin.”
One such company, On-Line PLC (LON:ONL), skyrocketed by simply announcing—not by doing anything, just by announcing—that its new name would be On-Line Blockchain Plc.
Its stock shot up by 394%.
Does that seem rational to you? Investors had not seen its investments into blockchain, nor had they any reason to believe that the company had expertise in blockchain. It was all about “branding.”
Sad as it seems, capital markets are capable of this much irrationality in short bursts. The upside is that cooler heads prevail over the long haul. Truth eventually rises to the top, and markets rebalance.
That said, for us to accurately model the short term, we must recognize that name brand recognition is a factor.
We believe that this phenomenon explains Litecoin’s current state. It hovers around the $55.00 level, during a bull market no less, because investors are blinded by the surge in Bitcoin prices.
It’s no wonder that BTC dominance is all the way up to 59.5%. It hasn’t been that high since early May.
Daily Litecoin Chart
Investors should keep faith in the long-term prospects of Litecoin. Despite the current slump, we hold our $200.00 Litecoin price forecast for 2018.