“Expect a lot of buyers to start to come in anywhere between February and April.” Those were the prescient words of Nugget’s News’ Alex Saunders in a January 31 video wherein he described how the price of bitcoin (BTC) and litecoin (LTC) tends to follow four-year super cycles based around their respective block reward halving schedules.
Four months have now passed since Alex uploaded his in-depth video. To say his prediction has played out exactly as described is, well, pretty much spot on! Indeed, in the time since the video, LTC has spiked by a whopping 268% – from $31 to $114 per coin.
In Alex’s opinion, things are just getting started. How high does he think LTC can go in what is Litecoin’s third four-year super cycle? $2,000. From current prices, that’s a 1,650% jump. And to think, that’s accounting for the decreased slope of the trend line we see after each super cycle…
Wait, What’s a Halving?
When you hear people mention the word halving – usually in the context of Bitcoin or Litecoin – they are talking about a rare event where the reward earned by miners for mining a new block is cut in half.
Need an example? Seeing as the Litecoin halving is fast-approaching, let’s use that. Roughly every two and a half minutes, a Litecoin miner will successfully mine a new block. In exchange for their services, they receive something called a block reward.
Litecoin’s block reward is currently 25 LTC. However, this will soon change. As of August 6th, miners will start earning just 12.5 LTC for mining a block. Why? The halving. That’s why.
Why Halvings Happen
By halving the block reward for miners, the network ensures its underling cryptocurrency does not suffer from high inflation while it is progressively distributed. In this sense, you can think of halving as a way to control inflation.
Remember: the price of a cryptocurrency like bitcoin or litecoin is based on demand and supply. Every time a block reward halving occurs, the amount of new coins entering the circulating supply is slashed by 50%. When something becomes scarcer, price rises. Don’t believe me? Next time a tropical cyclone hits Queensland, see what happens to the price of bananas!
Halving events also encourage the sustainable growth of an ecosystem surrounding a blockchain and its given cryptocurrency. Because of halving, it will take decades for the total supply of BTC and LTC to be issued. This incentivizes miners to participate in the network for a long time. The more miners that mine, the more secure the network becomes.
Litecoin Halves, Then What?
When Litecoin’s block reward halves in early August, expect the “halving hype” to quickly shift to Bitcoin; providing a strong catalyst for a sustained BTC price run-up.
Indeed, it appears the anticipated hype is already being priced in by forward-looking cryptocurrency investors. This is a scenario Alex alerted viewers of when discussing Bitcoin’s four-year super cycle in his January 31 video, suggesting “the market [will] begin to anticipate the next halving around May or June.”
Certainly, with BTC already up 68% in May, it makes you wonder what could be ahead…