Litecoin has completed its long-awaited halving today, but investors appear to have reacted by participating in a sell-off.
Litecoin has completed its third halving, reducing block rewards to 6.25 LTC.
During a halving event, LTC block rewards are permanently halved. This event occurs regularly, roughly every four years or every 840,000 hash blocks mined by miners.
Today's halving marks the third for Litecoin, meaning its block rewards have been reduced three times since its inception. The first halving saw block rewards for the cryptocurrency increase from an initial 50 LTC to 25 LTC, while the second halving further decreased rewards to 12.5 LTC.
With the recent halving, miner rewards for solving blocks have been further reduced to 6.25 LTC. The purpose of halvings is to control the asset's inflation.
These block rewards received by miners are the only way new tokens are introduced into circulation. By repeatedly reducing them, the supply of the cryptocurrency increases at a slower rate.
Eventually, as halvings continue, block rewards will approach zero. This is projected to occur around the year 2142. At that point, the asset's supply will reach its maximum limit, and miners will have to rely on transaction fees to cover their ongoing costs.
As halvings are significant events, it is no surprise that this recent event was widely discussed beforehand. In early July, the asset experienced a strong surge towards the $114 mark as the market anticipated the halving, which was only a month away.
However, this upward momentum soon fizzled out, and since then, LTC has struggled to build significant upward momentum.
This was also true for today's halving, as Litecoin instead continued to plummet. It appears that the event has indeed turned into a "buy the rumor, sell the news" scenario.
Following the recent drop, Litecoin has fallen below the $87 mark and has declined by almost 7% in the past 24 hours. These large losses mean LTC is the worst-performing coin among the top cryptocurrencies by market capitalization during this period.
Even though the asset's price performance may have been poor, LTC supporters can take solace in the fact that the asset has made significant progress in terms of other network-related metrics since the previous halving, as shown by data from IntoTheBlock.
Interestingly, the price at which both halvings occurred was approximately the same. The cryptocurrency seems to have developed well in terms of user base and network growth.
This impressive increase in adoption could be attributed to Litecoin's ability to offer cheap and fast transactions compared to some other networks, such as Bitcoin. However, LTC investors can only hope that this growth is reflected in the price as well.
Featured image by Kanchanara on Unsplash.com, Charts from TradingView.com, IntoTheBlock.com.
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