Comparing Litecoin and USD - Which Cryptocurrency is the Best Investment?

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Litecoin is one of the top-ranked cryptocurrency and quite popularly paired with global fiat currencies. Litecoin is an open-source and peer to peer digital currency that operates on a decentralized network, which means that there is no third party such as banks or government institutions to lay down the rules and policies for individuals to follow. Cryptocurrency such as Litecoin can be stored on an online wallet.

Bitcoin was the first cryptocurrency to launch in 2009 and quickly rose to fame due to blockchain technology, which is fundamental in nearly all the other digital currencies we see today, such as Ethereum, Litecoin, Dash, and Ripple. Litecoin went live on October 13, 2011, and was noted to be similar to Bitcoin. Charlie Lee performed an alteration or ‘hard fork’ in Bitcoin code to form Litecoin.

Charlie Lee was an employee of Google and worked as Engineering Director in Coinbase which is the leading platform to buy, sell, and store digital currencies. The purpose of developing Litecoin was to resolve some of the issues in Bitcoin, such as transaction speed and transaction fees. Litecoin is known to offer faster transaction speeds and near-zero payments anywhere in the world. Litecoin can process up to 56 transactions per second while Ethereum does 15 and Bitcoin does 7 transactions in a second.

Litecoin is capped at 84 million, and the network is capable of automatically modifying to accommodate an increasing number of the transactions without the need for any changes in the blockchain code. Bitcoin, on the other hand, is capped at 21 million. Almost 75% of Litecoin is already mined. Litecoin is termed as the younger brother of Bitcoin, and in the cryptocurrency market, Litecoin is often referred to as ‘Silver to Bitcoin’s Gold.’ The block generation speed of Litecoin is 2.5 minutes, which is four times faster than Bitcoin.

Litecoin is the third most popularly traded digital currency based on market capitalization after Bitcoin and Ethereum. Litecoin crossed market capitalization of $1 billion in 2017, and it was also the first cryptocurrency to not only adopt Segregated Witness also known as ‘SegWit’ but also the first digital currency to execute a transaction on a Lightning Network. Litecoin has become one of the best digital platforms to transfer funds with the lowest transaction cost.

What is the LTC/USD currency pair?

The Litecoin (LTC) pairing with the United States Dollar (USD) is given by ‘LTC/USD’ where LTC is the base currency, while USD is the quote or counter currency. The LTC/USD matching shows a combination of LTC, which is among the top five most common cryptocurrencies, and US Dollars, which is the strongest fiat currency in the world. LTC offers sudden volatility while USD offers stability and liquidity.

Traders residing in the US tend to trade LTC with USD as are familiar about the price volatility of the Litecoin and the stability and liquidity of US Dollars as compared to any other major currencies.

During the day, the price of LTC/USD fluctuates just a few percentages, but in a week, the pair may move close 5%. In a month, the LTC/USD price may move up to 10% and allow short term traders to speculate the price movements and try to profit from it.

The LTC/USD specifies the relationship of Litecoin with the US Dollar. The LTC/USD pair shows how many US Dollars are required to buy one Litecoin. The current exchange rate is 1 LTC = $44.02

History of LTC/USD Pair

Charlie Lee launched Litecoin on October 7, 2011. Lee wanted to improve the protocol of Bitcoin and offer a digital currency that offers a wide range of features that are practical for everyday use. The Litecoin network officially went live on October 13, 2011. Litecoin functions on a ‘Scrypt’ algorithm while Bitcoin work on the SHA-256 hashing algorithm.

Lee performed an alteration in Bitcoin called ‘hard fork’ that resulted in Litecoin, which increased the total supply, slightly changed the algorithm, and changed the speed at which new blocks are added to the chain. In the first two years, Litecoin did not see massive success, and the price remained around $2, but in 2017, the price surged and touched an all-time high value of $375 on December 19, 2017.

Litecoin was a success as it effectively addressed some of the concerns in Bitcoin, such as slow transaction speeds, scalability, and complicated mining. The current market capitalization of LTC/USD is $2.9 billion, while the circulating supply is 65.50 million.

United States Dollar or more commonly known as the US Dollar, is the world’s most dominant fiat currency. US Dollar is a benchmark for all the global currencies and also the number one reserve currency. USD is paired with all the major and minor global currencies, and nearly all the commodities are valued in US Dollars. US Dollar is part of almost 90% daily Forex transactions. USD is also paired with notable cryptocurrencies such as Bitcoin, Ripple, Ethereum, and Litecoin.

How to analyze the LTC/USD Price Chart

If we examine the price chart of the LTC/USD pair, we note that the pair traded in the range of $50.00 to $85.00 from the second week of January 2020 to the second week of March 2020. The value of LTC/USD fell to the lowest value of $30.83 on March 12, 2020, but started to see uptrend from the first week of May 2020. In the last few months, from May 2020 to September 2020, the value of LTC/USD is trading from $40.00 to $70.00. The highest value of LTC/USD recently was $67.54 on August 17, 2020.

Currently, LTC/USD pair trades on $44.02. The Bid price is 43.58, while the Ask price is 44.15.

If you think that the price of LTC will appreciate against the USD, then you will go long or Buy, and conversely, if you speculate the price of LTC will depreciate against the USD, then you will go short or Sell.

What causes price change in the LTC/USD pair?

Like every other cryptocurrency, the value of Litecoin depends on certain factors. As Litecoin is closely related to Bitcoin, there are some factors that affect both the cryptocurrencies. As with most assets, the supply and demand of Litecoin impact its price. The scarcer the Litecoin, the more its price. Some of the key elements that traders need to analyze are

  • The developments, changes, and price movements of Bitcoin
  • The growing number of similar cryptocurrencies and their price
  • The acceptance and market sentiment regarding Litecoin
  • The number of exchanges offering Litecoin is few, but in the future, if more exchanges begin to offer Litecoin, then the demand and price of Litecoin will increase.

US Dollar is a fairly stable currency, but its price is dependent on key macro-economic factors. The value of USD is controlled by the Federal Reserve (Fed), which also releases the monetary policy. The price of USD is impacted by interest rates, Gross Domestic Product (GDP), inflation, employment rate, trade relations, and international politics. Traders need to regularly watch the economic reports and news to try and accurately speculate the price movements of LTC/USD and increase their chances of making profit.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.

Available Cryptocurrency CFDs on R1investing

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