Litecoin Crash Fears Mounting
Litecoin’s moonshot journey has sent investors into a tizzy. Is Litecoin in a bubble? Will Litecoin crash in 2018? What can cause a Litecoin crash? Questions like these are creating an air of fear, uncertainty, and doubt (FUD) about a possible Litecoin crash. This “FUD” factor is beginning to shroud LTC prices as we watch them shift into reverse gear.
So I’ll cut straight to the chase and address your concerns.
Is Litecoin Price in a Bubble?
I hate to say this, but, yes! Wait, this doesn’t automatically mean that a crash is around the corner (I’ll get to that question shortly). For now, hold your horses and allow me to explain why I call it a bubble.
If you look at the LTC price chart below, you can see two distinct sections on the chart—the price trajectory marked with green and the one marked with red.
I would classify the green portion as the usual uptrend in prices. This is the price action we’ve seen for the most part of this year as Litecoin prices made a steady northward advance. There were some swings here and there but nothing out of the ordinary.
As soon as we move to December, however, prices go hyperbolic. The skewed triple-digit ascension is a classic indicator of a price bubble.
Chart courtesy of TradingView.com
In case you missed it, this sudden surge in price built up last week after Litecoin’s founder, Charlie Lee, appeared on a number of TV and radio shows, where he talked at length about this digital currency being a cheaper and faster alternative to Bitcoin.
Soon after, many who had possibly never heard of Litecoin before began to hoard it, all because Lee mentioned Litecoin and Bitcoin in the same sentence. Mind you, the Bitcoin mania has likewise pushed Bitcoin prices into a much bigger bubble right now.
So, in spite of being a proponent of this cryptocurrency, I cannot help but view the current state of prices as a Litecoin bubble.
But do I see a crash in 2018? Before I answer that, let’s first establish what could cause it.
What Could Cause LTC to Crash?
It is a no-brainer that such instant rallies, as seen above, are followed by consolidation in prices—which simply means that prices begin to drop to a more stable level.
A price correction is already happening as the LTC to USD rate reverts back under $300.00, after touching a high of $350.00. This downward journey of prices could go on until they find support.
This support will come from the “HODLers” of Litecoin—the Litecoin zealots who often use the catchphrase “Hold On for Dear Life” to remind each other to clutch onto their Litecoins if prices begin to crash.
As I’ve mentioned before, Litecoin buyers are currently split between two clubs—the “zealots” and the “sheep.” The zealots follow their HODL motto, while the sheep just follow the herd.
It is the sheep that have brought on the price correction, as their herd decides to sell their Litecoin holdings. But without the zealots, the sheep may not be able to bring about a crash in Litecoin.
Case in point; Litecoin price could only crash if the holders begin to unwind their positions. This is a scary prospect we hate to consider, but we must.
Is Litecoin Going to Crash in 2018?
So, what is the likelihood that the zealots would give up their holdings in 2018? It’s very slim.
The zealots believe that Litecoin is the better “medium of exchange” in the digital world, as opposed to Bitcoin. They propose that Bitcoin’s price volatility makes it counterintuitive to use it for day-to-day transactions. For them, Bitcoin is “digital gold” which they can stash in the “cold storage” as a “store of value.”
Bitcoin’s little brother Litecoin, on the contrary, is their “digital silver,” which they can use for settling routine financial transactions. Litecoin is not only cheaper to use (as it takes only a fraction of Bitcoin’s processing fees), but also faster (as it can process transactions much faster than Bitcoin, cutting long wait times).
The zealots have joined hands to fulfill the dream of Bitcoin founder Satoshi Nakamoto (who remains an enigma to this day). In this dream, the world’s fiat currency-based financial system has collapsed and is replaced by the blockchain-based decentralized, uncensorable, borderless monetary system uncontrolled by any single authority.
As long as their dream is alive—and Litecoin founder Charlie Lee is making sure he keeps it alive—the probability that the zealots would sell off all their holdings in 2018, causing a Litecoin crash, is negligible.
Bear in mind that when I say crash, I do not mean a 20%, 30%, or even 50% price drop. That’s quite usual for cryptocurrencies. Just look at Litecoin’s price movement in the last three days. On American cryptocurrency exchange Coinbase, LTC price has dropped from as high as $358.00 to $278.00—that’s over a 20% drop.
Is that a crash? No.
A drop of over 50% is what can really count as a crash for an investment as volatile as a cryptocurrency.
Analysts are not astrologers with hidden prophetic powers, but once in a while, we all like to go Nostradamus in our price predictions.
It’s true that there are about 1,300 other altcoins out there that pose as Bitcoin alternatives, but only Litecoin has managed to garner recognition as “digital silver.”
The Litecoin founder’s recent marketing drive has taken this digital currency to the mainstream where it is finding significant traction as a legitimate investment vehicle. All the media coverage it’s getting is bringing in new zealots to its platform.
Long story short; I’m not seeing a Litecoin crash in 2018. A major correction is, however, quite possible—a trailer of which we’ve seen this week. Yet, the price drop may do one good. It will create an opportunity for those late to the crypto-party to get in.
That said; we’re sticking with our Litecoin price prediction for 2018, maintaining our LTC price target at $400.00.