Litecoin’s market price follows Bitcoin’s but at a much smaller scale. This is because its market price is a function of market sentiments, economic factors, risk tolerance, investor and trader preferences, hype, news, and other factors influencing investment prices.
Litecoin is not as popular as Bitcoin, probably because it has not received the same attention as the older cryptocurrency. However, it remains in the top 20 most traded cryptocurrencies by 24-hour volume. As the second oldest cryptocurrency, this is significant as it demonstrates that it still captures the interest of many investors. Here’s why Litecoin has held on nearly as long as Bitcoin and why it tends to follow its price.
Key Takeaways
- Litecoin was one of the first “altcoins” to draw from Bitcoin’s original open-source code to create a new cryptocurrency—one that is still active today.
- Because Bitcoin remains the principal cryptocurrency, other major altcoins such as Litecoin do tend to follow its price trends.
- Litecoin’s creator, as well as other adherents, have referred to Litecoin as the silver to Bitcoin’s gold.
Litecoin Is Forked From Bitcoin
Litecoin is a fork of Bitcoin, created in 2011 after its developer, Charlie Lee, decided that Bitcoin needed several improvements. He also thought that it needed a cryptocurrency that complemented its use case, one that was similar to currencies used in the past. Litecoin was therefore created for the same purpose as Bitcoin, to be a payment method, but one that could be used along with Bitcoin.
The concept of “..a silver to Bitcoin’s gold” was (and is) often quoted, referring to how silver and gold were used in the past as currencies. One was more valuable and rare than the other (gold), so it made sense to conduct smaller transactions in the less valuable and more plentiful one (silver). Lee intended for Litecoin to be used in much the same way silver and other metals supplemented gold.
A fork from Bitcoin created a cryptocurrency where much of the coding remained the same. Some adjustments were made to the total number of coins that would be made available, the rate at which they would be introduced, and how they were mined to ensure Litecoin didn’t compete directly with Bitcoin.
Why Litecoin Follows Bitcoin’s Price
As Litecoin matured, it followed in Bitcoin’s footsteps, becoming adopted as an investment and speculative opportunity. It began to be treated by investors and traders in the only way they knew how—as a possible way to generate returns or profit from price fluctuations.
Investor Treatment
Sentiments and strategies from the commodities and stock markets carried over to the cryptocurrency market. Each crypto then generated a base of investors and users, growing or falling in popularity. Bitcoin landed on top as the favorite for speculative investors, and Litecoin fell further down the ladder. However, like other altcoins, it was still traded in the same way as Bitcoin.
It makes sense that Litecoin’s market price follows Bitcoin’s, although logarithmically. This is because Bitcoin commands such a high price that the differences are much more pronounced. When Bitcoin’s price rises, Litecoin’s price mimics it somewhat, much like other cryptocurrencies.
Trading View
Price Influencers
Supply and demand might be the most significant of Litecoin’s price influencers, similar to Bitcoin. Bitcoin’s supply is limited to 21 million; Litecoin has a maximum supply of 84 million—four times that of Bitcoin. Litecoin is also on a delayed halving schedule compared to Bitcoin because it was released two years later.
Litecoin halves its rewards every four years like Bitcoin does. Bitcoin underwent its latest halving in April 2024, reducing its reward to 3.125 BTC per block. Litecoin will undergo its next halving event in 2027, dropping its reward to 3.125 LTC per block; however, there will be more LTC remaining after its next halving than Bitcoin at its last event.
Many investors are concerned with acquiring as many Bitcoins as they can as the cryptocurrency’s new coin release rate slows. Litecoin is not as much of a concern for investors yet because new bitcoins can still be acquired. How long this will last is anyone’s guess, but there may come a point where investors look to other cryptocurrencies for returns and profits.
Is LItecoin Linked to Bitcoin?
Litecoin is a Bitcoin fork and has been used in the past as a testbed of sorts for improvements. It also follows Bitcoin’s price movements at a much smaller scale, but it is not linked to Bitcoin.
What Altcoins Follow Bitcoin?
Many altcoin prices follow Bitcoin’s because it is the cryptocurrency that sets the standard and pace. Litecoin, ether, dogecoin, and many others have trends that mimic Bitcoin.
Is Litecoin a Clone of Bitcoin?
In a sense, yes. It is a hard fork that was redesigned to complement Bitcoin as an additional, less valuable, and more plentiful currency.
The Bottom Line
Litecoin follows Bitcoin’s price trends because it is primarily treated as an investment and tradable commodity. While its trends somewhat mimic Bitcoin’s, it has a much lower market price because investors do not place as high a value on it.
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As of the date this article was written, the author owns BTC and LTC.
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