Although many argue that the halving of the block reward in 2019 will decimate the price, Litecoin remained relatively stable. According to the latest studies of Coin Metrics, there are probably several explanations.
However, it could take another year until we see the full effect of the halving on the market.
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Litecoin – a case study for other Block-Reward-half adjustments
Since Bitcoins are moves to halve in may 2020 in more detail, the potential impact of the 50 per cent reduction in block rewards in the crypto industry is becoming more and more important. According to the latest research results of Coin Metrics to the low number of block premiums, the industry has seen so far, and your “rare nature” every major prediction nearly impossible.
Nevertheless, Kevin Lu, and the Coin Metrics Team litecoins August-halving used to evaluate two of the most common block rewards. The first theory States that the halving of the Block reward has little impact on the price of said Coins, as they are already priced in.
This is due to the fact that Reductions prescribed by the Protocol and, therefore, all market participants are known. And there are half coats known to all, says the efficient market hypothesis (EMH), their possible consequences fully in the price of the Coins to reflect. Therefore, there is no immediate reaction in the price of the Coins immediately after the halving.
Litecoins development in the year 2019 supports this theory. The market has taken the halving in advance. Litecoin has increased in the first half of 2019, most likely because of this phenomenon, by 350 percent and has exceeded all of the other crypto-currencies, with the exception Binance Coin (BNB).
The poor Performance of the Coins in the second half of the year could be explained by the fact that traders dissolve their positions, so Coin Metrics.
The Miner selling pressure drives the prices to the half-coats to the top?
Those who support the theory that bitcoin halving drives the price upwards, often lead to the reduction of the selling pressure from the miners that occurs after the halving. Since miners represent the largest single cohort of natural, resistant seller, is likely to have the miners exerted pressure to sell a significant influence on the price of a crypto currency.
The Coin Metrics report used Litecoin to illustrate the example. Since Litecoins annual output before the half was 8 per cent, it means that the Miner’s revenue amounted at current prices of about $ 200 million per year.
This corresponds to a natural pressure to sell of $ 600,000 per day, since it is assumed that miners sell almost their entire reward for Fiat to cover costs.
After the August-halving the annual reduced amount of Litecoin for delivery to only 4 percent. This means that the daily pressure to sell was approximately a $ 300,000.
Such a drastic reduction of the forced selling pressure, we should let the prices rise, the report said.
This theory is not promising, but for Litecoin, and will most probably do also on Bitcoin. Recorded since, according to the Litecoin halving in August, no noticeable price increase was, to the best of a lot of riding this idea and say that the Miner selling pressure accounts for a small portion of the Trading volume.
In comparison to the Trading volumes observed on the stock exchanges, the reduction of the daily sales pressure by the Miner to a $ 300,000 maximum are likely to be negligible.
However, Coin Metrics and found that these two theories “merit further investigation”. With Bitcoin, Bitcoin to Cash, Bitcoin to Cash SV and the ZCash, will all go through for the next year, a halving of the block reward, it could take another year or more, until the market sees the true effects of the Litecoin halving.