After a very turbulent 2018 which saw more than $770 billion wiped off the crypto market, most major cryptocurrencies have come roaring back this year – largely thanks to key events this year such as the ‘halving’. One cryptocurrency, in particular, has been leading the way this year and it is not the best-known and largest cryptocurrency Bitcoin. Litecoin is up nearly 370% so far this year and some analysts believe it is just the beginning.
In this article, we explain the Litecoin ‘halving’ event, why it has cryptocurrency traders very excited and how you can participate in this historic event, starting today!
The Litecoin Halving
Mark the 5 August 2019 in your calendars. On this day the Litecoin block mining reward halves. This means that Litecoin miners will be rewarded 12.5 Litecoins, instead of the current 25 Litecoins miners get paid to mine one block of the coin.
This event – known as the ‘halving’ – happens every 840,000 blocks which amounts to roughly every 4 years. The last Litecoin halving saw the coin gain around 60% in value in the prior three months.
The theory is that a cut in supply of Litecoins will drive the price higher while maintaining the value of the coin. The upcoming ‘halving’ event has created a frenzy in the price of Litecoin as the next section shows.
How to Trade the Litecoin Halving
One of the reasons some traders like to trade on cryptocurrencies is due to the huge amounts of price swings and volatility the market can produce. One only needs to look at the weekly price of Litecoin relative to the US dollar (LTC/USD) to see how volatile it is:
Source: Admiral Markets MT5 Supreme Edition, LTCUSD, Weekly – Data range: from Oct 23, 2011, to July 3, 2019, accessed on July 3, 2019, at 12:01 pm BST. – Please note: Past performance is not a reliable indicator of future results.
As more participants are now actively involved in trading on Litecoin, the volatility of the market has increased. With the upcoming ‘halving’ event, some traders and investors have already started to position themselves for it – helping Litecoin surge 370% this year. Some would say a rally higher was long overdue after the historic crash in 2017 to 2018. However, the recent price action of LTCUSD shows the recent demand more clearly:
Source: Admiral Markets MT5 Supreme Edition, LTCUSD, Daily – Data range: from Dec 3, 2018, to Jul 3, 2019, accessed on Jul 3, 2019, at 12:06 pm BST. – Please note: Past performance is not a reliable indicator of future results.
The above chart shows the daily price action of the LTCUSD CFD. Cryptocurrency CFDs, or Contracts for Difference, allow traders to speculate on the price of a cryptocurrency without owning the underlying coin. This form of speculation allows traders to go long and short on the market.
Cryptocurrencies that are traded against the EUR, such as LTCEUR, can also be traded 24 hours a day, 7 days a week. The LTCEUR chart below is quite similar to the LTCUSD chart above meaning traders can employ the same technical analysis skills on both.
Source: Admiral Markets MT5 Supreme Edition, LTCEUR, Daily – Data range: from Dec 3, 2018, to Jul 3, 2019, accessed on Jul 3, 2019, at 12:010 pm BST. – Please note: Past performance is not a reliable indicator of future results.
In the above daily chart of LTCEUR CFD, the red wavy line is the 50-day moving average price. This indicator – which is free in the Admiral Markets MetaTrader platform – helps traders analyse the trend of the market.
As the moving average is rising it indicates that, on average, prices are rising. This means more people are buying than selling. This gives traders a unique edge in the trend direction of the market.
- If the price can stay above the moving average, buyers are in control, identify possible long positions.
- If the price breaks below the moving average, sellers may take control, identify possible short positions.
Traders will often use other indicators on the MetaTrader platform, as well as price action patterns to look for more clues on when to buy or sell. All these tools put together formulates the beginning of a trading strategy. In fact, you can visit Trading Strategies for This Year to view specific cryptocurrency trading strategies to start with today.
Trading with Cryptocurrency CFDs
Cryptocurrency CFDs allow traders to speculate on the price movement on the underlying cryptocurrency rather than owning it.
This allows professional traders to trade 24 hours a day, 7 days a week with EUR cryptocurrency crosses, as well as the ability to go long or short on any cryptocurrency CFD – with no actual crypto assets required for trading.
Trade CFDs on LTCUSD, LTCEUR, LTCBTC, BTCEUR, ETHEUR and many more! Click the banner below to open an account and start trading!
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