Litecoin's Price Is Trading At A Massive Discount
Supporters of Litecoin (LTC) often proclaim the sixth crypto of the top 10 as “LTC is digital silver if Bitcoin were gold”. However, for others it can also be considered as a rough diamond.
In a report released yesterday, July 31, eToro senior market analyst, Mati Greenspan, argues that LTC's price is trading at a “massive discount to what it should be worth”. So Mr. Greenspan came to this conclusion through various evaluations and review of both technical and fundamental factors.
Below is a complete summary of what appears in the report:
On the technical side, it is important to mention that Litecoin, a blockchain based on Proof of Work (PoW), is the dominant currency extracted using the scrypt algorithm. As long as this remains the case, Litecoin will remain highly resistant to 51 percent attacks; as there is not enough surplus hashpower to mount an assault on the existing network.
Greenspan also praises Litecoin developers for structuring cryptocurrency as a complement to Bitcoin (BTC) rather than a competitor. Allowing LTC to tie itself to main crypto by adopting innovations such as Segregated Witness (SegWit) and the Lightning Network (LN) – which is being developed.
Adoption And Fundamentals
The report further argues that Litecoin has achieved more widespread adoption than many of its competitors with comparable or higher ratings. For example, LTC has more than twice the Daily Active Users (DAU. Alternatively: daily active addresses, or DAA) of Bitcoin Cash (BCH), the fourth largest cryptocurrency with a market capitalization of approximately three times the size of Litecoin's valuation.
Of course, we also know that Litecoin has been in the market for longer time than Bitcoin Cash, which may be related to the higher number of DAU. As a result, the relationship between stock market capitalization and LTC's DAU is among the lowest in the large-cap index, suggesting that the price of the currency is discounted in relation to the current level of currency adoption.
In addition, the purchase by the Litecoin Foundation of a 9.9 percent stake in the German financial institution WEG Bank could further strengthen the pace of LTC's adoption.
Noting that the current bear market has driven down cryptocurrency prices on relatively indiscriminate measures, Greenspan speculates that LTC – as an individual asset – was oversold relative to its fundamentals. This seems to be true as the price of Litecoin coins has fallen by approximately 81 percent from its historical high, exceeding 71 percent of the market as a whole.
“Given that Litecoin has an established and stable working product, as well as significant adoption, this bear market of the whole cryptocurrency industry could have lead to Litecoin being oversold,” Greenspan concludes.
At the moment of writing this article, Litecoin is the seventh most important cryptocurrency in the market by market capitalization with $4.4 billion dollars. Each LTC coin can be bought for $76 dollars. The report is available at the following link: https://www.etoro.com/wp-content/uploads/2018/08/LTC-eToro-Research.pdf