Following its big collapse during the crypto meltdown, should you “buy the dip” in Litecoin (CCC:LTC-USD)? Sure, like the rest of the altcoins, it has started to recover from its May 19 losses. As of this writing, it has moved up somewhat from lows and changes hands at around $173. Yet, still up so far this year, prices could have room to decline further as more new entrants get scared off by the volatility.
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That being said, once things start to settle, there may be opportunity here — especially for crypto investors who are looking to branch out from Bitcoin (CCC:BTC-USD).
As one of the oldest altcoins around, Litecoin could be just the ticket. Of course, its platform may not be as popular as Ethereum (CCC:ETH-USD) in the decentralized finance (DeFi) community; it’s not even really a potential contender for widespread DeFi usage like Cardano (CCC:ADA-USD) is.
However, that doesn’t mean that LTC’s popularity can’t at least hold steady, if not go up over time. It may be best to steer clear for now, as it’s uncertain how long the current crypto maelstrom will last. But, once things stabilize, this may be one of the top Bitcoin alternatives to consider.
The Fundamentals of ‘Also Ran’ Litecoin Are Solid
As InvestorPlace’s Muslim Farooque discussed on May 17, Litecoin was once the “silver to Bitcoin’s gold.” Getting its start back in 2011, this was an altcoin before terms like “altcoin” had even entered the lexicon.
Despite being around for a decade, though, it’s no longer the number two crypto out there. In terms of market capitalization, it doesn’t even rank in the top 10. Yet, while it’s more of an “also ran” among the many names in this emerging asset class, it’s still solid when it comes to utility.
Mostly, Litecoin has advantages over Bitcoin when it comes to blockchain transactions. That is, faster transaction speeds and lower fees. When it first launched, this gave LTC a clear edge. But in this day and age, when scores of other blockchain platforms can tout the same advantages, Litecoin now does little to differentiate itself.
This may point to why it continues to be behind frontrunners in terms of widespread adoption. Even so, though, the crypto could continue to grow in use as a medium of exchange — maybe not to Ethereum levels, but at least sufficiently enough to keep it in the horse race.
So, how does this relate to future prices? Even if Litecoin only holds steady, there’s a path for it to continue gaining in value as we continue to see crypto market participants cycle out of Bitcoin.
The Pivot Away from BTC Bodes Well for LTC
Following the recent panic, cryptos across the board are down big from their highs. Bitcoin may not have fallen the most on May 19. But, the collapse in prices could have an outsized effect on investor sentiment going forward.
What do I mean? BTC’s status as the gold standard of cryptocurrencies has taken a serious hit. Elon Musk recently highlighted its negative environmental impact while others have commented on it being supplanted by rival coins.
Fearful that Bitcoin is no longer the less risky option, now investors in this space are looking to diversify. Moreover, they don’t want to eliminate their crypto exposure entirely and they don’t want to miss out on high potential returns. After all, that’s the reason they got into this space in the first place.
This is going to help out the current hot coins — like Ethereum and Cardano — a lot more than Litecoin. Yet, the overall outflow of capital from BTC is a rising tide that could lift all boats.
Wait for Things to Stabilize, But Litecoin Remains Worthwhile
So, to what extent can the price of LTC go up if market participants swap their BTC for other cryptos? It’s hard to tell. Currently, it’s too early to determine whether this downturn will continue or if it’s temporary.
In the meantime, though, the selloff could go on. Prices may fall back down below $150 or even $100 before it’s all over. Yet, once things stabilize — and if crypto investors accelerate their pivot away from BTC — consider Litecoin a worthwhile altcoin to buy.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.