Why PayPal Support Could Make Litecoin Shine Again
Litecoin is often considered the silver to Bitcoin as digital gold and is one of the earliest and, therefore, most decentralized cryptocurrencies. However, since 2017 when Litecoin reached its all-time high peak alongside Bitcoin, the altcoin has lost its luster.
A short-lived glimmer of positivity around the asset’s halving causes prices to climb, but again, Bitcoin left it behind. Fast forward to now, and Litecoin is suddenly sparkling again, following news that it would be one of four cryptocurrencies supported by PayPal in a recent announcement.
Of the four assets, Litecoin surged the highest – more than 20% – on the news, but why? And is it enough to keep the digital version of silver shining once again? PrimeXBT’s lead analyst Kim Chua explains the key reasons why PayPal’s support could bring new growth to the long-stagnant cryptocurrency.
PayPal Puts The Spotlight On Litecoin, Supports Crypto As A Whole
Payments giant PayPal has revealed Litecoin as one of four cryptocurrencies that it will soon offer its 346 million customers and eventually support payments at PayPal’s over 26 million merchants worldwide.
Out of the four cryptocurrencies that users in the USA will soon be able to buy – Bitcoin, Ethereum, Bitcoin Cash, and Litecoin – Litecoin rallied the hardest following the news. Gains have thus far sustained, and the altcoin could soon be targeting higher if momentum can sustain also, Chua says. Her analysis includes targets of $85 if resistance at $70 can be broken. But she also expects Litecoin to outperform the rest of the pack.
Throughout 2020, Ethereum was the best performer out of the four, driven by the DeFi frenzy that came to a climax over the summer months. Bitcoin is currently the best-performing mainstream asset, beating out gold trading, stocks, and just about anything else.
While Bitcoin Cash has its own set of controversies, the damage done to Litecoin sentiment when founder Charlie Lee sold his stake in the project at the peak in 2017. Lee famously sold the top of the crypto bull market while simultaneously predicting a chance of the altcoin going to $20. It fell to that price at the bear market bottom, crushing investors and believers in the project’s hopes of a recovery.
Tarnished Digital Silver: Litecoin’s Similiaries With Bitcoin Are Gold
The multi-year decline has left Litecoin with little interest aside from acting as a testbed for second-layer Bitcoin technology. But this isn’t all a bad thing. Because Litecoin’s technology is nearly on par with Bitcoin’s and due to the similarities alone, it proves Litecoin is a robust and secure network. Litecoin also shares similar economics and the same block reward halving mechanism taking place approximately every four years.
Where things begin to differ is in the asset’s total supply. There are four LTC for every BTC, with 84 million compared to just 21 million. The current circulating supply of BTC is around 18.6 million, with a market capitalization of $240 billion, while LTC’s supply is about 66 million and $3.7 billion in cap.
Because the supplies and market cap are not proportionate with one another, the current price per BTC is $13,000, while each LTC is priced at roughly $58. The low cost relative to Bitcoin, Ethereum, and Bitcoin Cash, is yet another reason why investor interest dimmed on Litecoin over the years.
Sinking Social Sentiment Turn Off The Lights On LTC, PayPal Turns It Back On
Due to the cryptocurrency market’s speculative nature, the buzz in the community and hype on social media is essential to luring in investor capital for all of the reasons mentioned above, including low price, founder issues, and negative sentiment, it has led to Litecoin lagging behind the rest of the market.
But that all could change now that Litecoin is on the list of cryptocurrencies supported by PayPal and has the furthest road to recovery. Aside from the seismic announcement on its own, moving forward, LTC being listed as one of the four crypto assets USA users can buy on PayPal will be a much-needed boost for Litecoin.
Not only will interest and hype begin to return, but by introducing the altcoin to a new audience and userbase that isn’t aware of the issue with founder Charlie Lee, or the years of disinterest, prices will begin to race and catch up to Bitcoin, and Ethereum’s almost two-year-long head start.
Non-crypto users who aren’t familiar with cryptocurrencies may see Litecoin’s low cost as a low barrier to entry and the cheapest price to own one full coin of the cryptocurrencies offered on PayPal. They could also view the lower cost coin to be a safer investment when first risking money in crypto.
Immediately following the news, social media mentions of Litecoin went through the roof, spiking several times higher than the usual dull trading volume, as the chart above demonstrates.
Social media has since fallen back to normal levels, but the subsequent rise in trading volume has sustained the price increase over the last week, suggesting traders aren’t eager to take profit on what might be a long-term reversal. Former resistance at $52 should now act as strong support, while Chua says that there is “potential to move to around $70-$75.” She also says bulls are likely to “defend” the neckline of an inverted head and shoulders pattern that coincides with $52.
Ride Litecoin “Skyrocket” On An Upward Trajectory With PrimeXBT
Bitcoin being the first-ever cryptocurrency and having the largest regulatory acceptance and adoption, will always command a premium over its peers. However, few cryptocurrencies are as similar to Bitcoin as Litecoin is, which is a stamp of approval on the altcoin’s long-term value and longevity.
The market is now learning with more large-sized institutional participants that there isn’t enough BTC supply to go around, and because Litecoin’s supply is only four times more, digital silver has similar scarcity to Bitcoin and the precious metal its nicknamed for. As new investors come into crypto by way of PayPal, owning one full Bitcoin could feel too out of reach, while holding multiple Litcoin is highly affordable.
When that day arrives, Chua says the price per LTC could “skyrocket.” But before that happens, she claims that this spark set off by PayPal will need first to reignite renewed interest in LTC mining, once the price reaches a point where it is worthwhile again. Miner activity could also set off new developer interest, and building into Litecoin fundamentally could resume.
With activity high again, the buzz will be back, sentiment will soar, and Litecoin will shine again. “PayPal support will provide the much-needed impetus for LTC to turn around and begin on an upward trajectory,” the PrimeXBT analyst concluded.
Litecoin trading is just one of five cryptocurrency markets offered by the award-winning PrimeXBT, three of which match PayPal’s list of coins. The list includes Bitcoin, Ethereum, Litecoin, EOS, and Ripple, but the advanced trading platform also provides long and short positions on CFDs for stock indices, forex, commodities, and much more. There, traders can take advantage of the trend change in Litecoin and prepare for the upward trajectory that Chua claims could be ahead.