Litecoin transactions outperform Bitcoin; Can the Altcoin jump back into the top-10?

Saif Naqvi
Source: Pixabay

Strong competition from better-performing altcoins has warranted investors to overlook the former top 10 cryptocurrencies, Litecoin. Once perceived as a better alternative to Bitcoin, Litecoin never really lived up to its billing, with the price yet to best its 2017 ATH. On the transactional front, however, Litecoin is making headway and it’s hard to understand why the price is not.

Dubbed as the silver to Bitcoin’s gold, Litecoin was launched as a full decentralized, peer-to-peer virtual currency in October 2011. Former Google engineer Charles Lee envisioned a faster and more dominant network alternative to the king coin, stating it as the “lite version of Bitcoin”. The network became popular during its early years but has faded into irrelevancy since.

Network Activity and Price Divergence

Litecoin’s performance on the chart came to standstill after May 2021. Until then, its price was nudging along well compared to other alts. LTC even matched its 2017 ATH of $420 on the back of an 890% rally between September 2020-May 2021. However, Bitcoin’s crash during the same month was not kind to LTC. Its value plummeted by as low as 75% come June and has since failed to cross above the $400-mark.

The attached chart showed that despite May’s decline in price, the total number of addresses holding Litecoin kept increasing. The figure touched an ATH on 5 March, reaching 126.2 Million. Total addresses offer a unique perspective on the health of a network. An increase in the number of users sending or receiving a coin shows more engagement.

Additionally, Litecoin transactions have also increased constantly bettered Bitcoin since April 2019. Currently, the network has 40% more transactions than its larger rival. While an increase in both metrics generally denotes a healthier network, its price has not grown at the same pace.

Source: Twitter

Some were even exasperated at the divergence between the network’s activity and price performance. Crytpo investor Joseph Lassen used Metcalfe’s Law to argue that Litecoin was undervalued by as much as 92%.

Litecoin Comeback?

Unfortunately, an increase in total addresses and transactions has not resulted in a new ATH. Why is that so? Possibly due to other altcoins that offer more utility. It’s important to keep in mind that the Litecoin network does not support NFTs, decentralized applications, or exchanges. Its adoption is relatively low when compared to Bitcoin, with only a handful of firms accepting LTC as legal tender.

The top 20 crypto ladder shows that coins not functioning within the DeFi space have no place among the elites.

Bottom Line

Source: TradingView

At the moment, Litecoin’s price was trading at a near 80% discount when compared to record levels. Furthermore, the candles have moved below their 200-day Simple Moving Average (green) for the most part since May 2021. The 200-SMA is used to gauge the long-term trend of an asset. The trend is perceived as bearish if the candles form below the average line.

Although Litecoin had tagged a major support region at press time, it’s doubtful whether it would be able to match up to its rivals once the next bull market comes by. However, the token will still be a good addition for those looking to expand their portfolio. The network has consistently delivered and it’s only a matter of time till it is factored in on the chart.