Frequently known as the silver to bitcoin’s (CCC:BTC) gold, the time may be right for investors to invest in litecoin (CCC:LTC). One of the oldest altcoins, litecoin has jumped over 85% since Dec. 10. But unlike other times when crypto values have surged, this time may be different.
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For a brief moment in early January, the value of the cryptocurrency market topped $1 trillion. Not surprisingly much of the attention has been on the value of bitcoin. And that makes sense. It sounds more appealing to throw out the fact that bitcoin is trading at more than $36,000 per coin. And according to Forbes, one bitcoin may be worth up to $500,000 by 2030.
However, litecoin correlates nearly perfectly with bitcoin. According to Coin Predictor, the correlation coefficient of their prices is 0.83. On range of -1 to 1, a score of 1 represents the strongest positive correlation. And you can buy litecoin for literally a fraction of what it costs you to buy bitcoin.
But why is now different? One of my favorite sayings is that life happens while you’re busy making other plans. I frequently see trends that emerge, seemingly overnight, but if you were paying attention the groundwork was laid. And that’s what I believe is happening with litecoin in 2021.
From Fear to Fun
Cryptocurrency is maturing and it has nothing to do with the value of the digital currency. It’s maturing in its messaging. When bitcoin first began capturing the imagination of investors, it seemed too complicated for the average investor to bother with.
And in truth it was. You needed to be extremely technologically literate to invest in litecoin. But that’s not the case today. Whereas a few years ago, you needed to know programming to initiate a crypto wallet (a digital wallet for a specific cryptocurrency), today there are mobile apps that make it easy to buy and sell cryptocurrency.
While ease of access is important, there’s a psychological component as well.
Keep in mind, that when bitcoin hit the scene in 2009 the world was still reeling from the effects of the Great Recession. The Federal Reserve had begun its process of quantitative easing that would last nearly a decade. Wealth, in the form of fiat currency, was crushed. It was the perfect storm for an alternative currency to arrive.
The problem was that while some investors may have had a fear of missing out. The greater fear was in getting involved and losing an entire investment.
There will always be an audience that buys litecoin and other currencies for as a hedge against the devaluing of fiat currency. But part of cryptocurrency growing up means that it’s going mainstream. For example, the divisibility of crypto currency is ideal for Robinhood investors who can buy litecoin and other cryptocurrencies directly from the app.
Litecoin Is Becoming a Medium of Exchange
One of the benefits of owning cryptocurrency is that there are a finite number of coins that will be in circulation (for litecoin that number is 84 million). But one of the obstacles to mainstream acceptance has been a lack of utility to ownership. The currency wasn’t remotely close to being widely accepted.
In that regard, PayPal (NASDAQ:PYPL) is helping litecoin and other digital currencies take a big step towards legitimacy. By making a limited number of cryptocurrencies, including litecoin, available on its platform, it should expand the use case for litecoin.
And that’s perhaps the biggest argument for litecoin and other cryptos. When I first started using PayPal, it was great for peer-to-peer transactions. But ultimately I had to move funds to my bank account for there to be utility. Today, I have a PayPal debit card (that provides minimal rewards) and PayPal is a common method of payment. Simply put, it’s just as efficient to use my PayPal account as opposed to my traditional bank account.
And that’s another reason to consider litecoin. The altcoin was first created as “the better blockchain,” but nobody knew what advantage there was to processing transactions faster than bitcoin meant. As cryptocurrency gains more utility, users will appreciate litecoin’s security and speed.
The Big Money May Be Coming
At some point, the regulatory framework surrounding cryptocurrency may become more well defined. When that occurs, it’s likely that the institutional investors will bring the big dollars into the crypto markets.
That’s why now is the time for investors to buy litecoin. The pandemic may have allowed some of us to blink on cryptocurrencies. But now that we’re opening our eyes, the landscape has changed and cryptocurrencies are growing up. Investing in litecoin is not without risk, but if you have room in your portfolio for a little speculation, this may be the optimal time to buy.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.