Source: Shallot Blockchain
In the first half of this year, the halving of LTC rewards is obviously the most topical event in the entire cryptocurrency world except for the sharp rise of bitcoin, which reversed the 18-year bear market, and the price of LTC did indeed rise considerably due to market hype. However, as the halved boots finally landed, LTC's upward momentum was quickly reversed and led the cryptocurrency market to decline in the second half of the year.
Because of this, the analysis of "the currency price is about to collapse after halving" flooded the market for a while. As mainstream currencies such as Bitcoin, BCH, BSV, and ZCash, which also have considerable influence, will usher in new reward reductions next year. Half-node, the market ’s panic about these currencies may "collapse" next year has begun to slowly ferment, but the latest research report released by Coin Metrics points out that this conclusion is actually too one-sided, and it can even be said that there are serious misunderstandings . Even from the perspective of the "culprit" that caused market anxiety by halving LTC, the impact of halving rewards on the corresponding currency is actually not great.
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Coin Metrics analysis points out that because the reward halving behavior is very “predictable”, before the event actually occurs, the market has ample time to digest the event in advance, and the boots actually land At that time, the impact that the event could have on the market has actually been thoroughly priced. We can see that when the price of the reward is halved at the arrival of many currencies, the market price will not fluctuate very sharply, and this market performance confirms the above point.
The sharp increase in the price of LTC in the first half of this year is actually the market's early digestion of the upcoming halving event. After all, as the reward halving is reached, the currency ’s “capacity” will remain relatively stable in terms of computing power. A 50% cliff-type shrinkage has occurred. According to the basic supply-demand relationship, when the demand remains relatively stable, a sharp shrinkage at the supply side will naturally lead to price increases. Of course, because the market generally considers LTC's halving this year as an important preview of BTC's halving next year, LTC's amazing increase of over 350% in the first half of this year does have some objective factors of market speculation, but the impact of this part is actually Not big.
As for why LTC experienced such a large price correction after halving, Coin Metrics attributed it to the concentrated departure of a large number of early buying orders.
The reason why "halving the impact on the market is not big" is reached, the following figure can give a quite powerful answer:
As shown in the figure above, under the circumstance that everyone believes that LTC has experienced a "slump" after halving, since the beginning of this year, among the top twelve currencies excluding market capitalization, the gain made by LTC still actually ranks first. four. From the above chart, in fact, the performance of LTC in the end of 2019 is actually not much different from that of most mainstream currencies. In the case that other currencies have not experienced half the reward, purely from the results, LTC's performance is actually very "ordinary".
Another question, is the miner the dominant player in the "halving market"?
There is a view in the market that because the people directly affected by the halving of rewards are miners, halving means that the return on mining will be reduced by 50%, and as the market most urgently wants to change the currency into legal currency to compensate for mining For a group of people who own the cost of mining, if it is assumed that they can sell all the mining income every day, then halving means that this part of the selling pressure will be halved after halving. Therefore, some analysts believe that after the reward is halved, the currency price of the corresponding currency should increase. After all, the selling pressure in the market has also decreased significantly with the reward halved.
However, Coin Metrics pointed out in the analysis report that, also using Litecoin as an example, LTC's annualized production capacity was about 8% before halving, which is estimated based on the current market value, which means that the total annual income of miners in the entire Litecoin market is About US $ 200 million is evenly distributed to each day, which means that on average, it is necessary to complete the sale of Litecoin worth about US $ 600,000 per day. As rewards halved, this number changed from $ 600,000 to $ 300,000.
Has there been a decrease in selling orders? It did decrease. But how much influence can it have? Maybe not big. Because from the current market perspective, the transaction of miners actually only accounts for a very small part of the entire market. At the time of writing, Coinmarketcap shows that Litecoin's trading volume has exceeded $ 2.7 billion in the past 24 hours. And the aforementioned 300,000 US dollars of miners selling each day, the market influence can be said to be negligible.
Coin Metrics pointed out that judging from the current market performance before and after LTC halving, it is difficult to draw any conclusions that are truly valuable or effective. Therefore, we cannot simply and crudely believe that the BTC market around BTC halving next year will definitely be Repeat the trend of LTC this year. Although the LTC halving seems to be over half a year ago, if we want to summarize our experience more objectively, we may need to look back at the specific performance of LTC after a year or more.