On-chain data shows that Litecoin traders are showing signs of capitulation as the asset’s much-anticipated halving event is only a few hours away now.
Is Litecoin Halving A Buy The Rumor, Sell The News Event?
Litecoin's "halving" is a recurring event that permanently reduces block rewards for miners. This occurs about every four years, with the third halving scheduled to occur in approximately five hours according to data from mining platform NiceHash.
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The upcoming halving event will result in a reduction of Litecoin's block rewards from 12.5 LTC to 6.25 LTC. These events have historically been important for the cryptocurrency as they signify a decrease in the production rate of the coin, making it more scarce. Due to the significance of these halving events, the market tends to speculate around them, leading to increased volatility. According to a recent tweet from on-chain analytics firm Santiment, traders have been closely monitoring the Litecoin halving in anticipation of its impact on the market.
Santiment has provided data on two metrics related to LTC in the above graph: "social dominance" and the "ratio of on-chain transaction volume in profit to loss". The former reveals the percentage of social media discussion related to the top 100 cryptocurrency assets that is focused on Litecoin. The chart shows a significant increase in this metric today, indicating that investors are engaging in a large number of discussions related to the halving event.
The latter metric tracks the ratio between profit-taking and loss-taking volumes on the network. As shown in the graph, this metric has recently fallen below the 1 mark. A ratio of less than 1 suggests that loss-taking is the dominant force in the market at the moment. The current loss volume is not only greater than the profit volume, but it is also more than twice as high.
This significant loss-taking may be due to investors who purchased coins before the halving, believing it to be a bullish event. However, as Litecoin has continued to decline, holders have panicked and are selling at a loss to avoid further losses. The high social dominance of the asset may also be due to FUD-related discussions gaining traction.
Based on these indicators, it is possible that Litecoin is experiencing a classic "buy the rumor, sell the news" event.
Litecoin traders capitulate ahead of halving. LTC Price
At the time of writing, Litecoin is trading around $91, up 1% in the last week. Litecoin traders capitulate ahead of halving.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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