InvestorPlace Assistant News Writer Brenden Rearick wondered in early May if Litecoin (CCC:LTC-USD) would keep moving higher after trading volumes were more than 140% higher than usual.
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My colleague provided LTC price predictions that ranged from $500 to $762 by the end of 2021. For a time, it looked as though these guesstimates would be pretty darn accurate as LTC shot up to an all-time high of $412.96 on May 10.
And then the wheels fell off as the second half of the month began.
Having dropped 35% in the span of 4 hours on Wednesday, it has lost around 50% of its value in 10 days of trading. To get back to its all-time high, Litecoin will have to double.
Given the trend right now appears to be down, not up, I’m not sure inexperienced cryptocurrency investors should be anywhere near this altcoin. Unless, of course, you actually plan to use LTC as currency and not an investment.
Venmo Accepts Litecoin
InvestorPlace contributor Mark Hake recently called Litecoin an altcoin that should survive the crypto bubble bursting. My colleague pointed out that PayPal’s (NASDAQ:PYPL) Venmo peer-to-peer money transfer service had begun to accept Litecoin, Ethereum (CCC:ETH-USD), Bitcoin (CCC:BTC-USD) and Bitcoin Cash (CCC:BCH-USD). PayPal has also begun allowing consumers to use cryptocurrency including Litecoin in the checkout process for its 29 million merchants.
“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” PayPal CEO Dan Schulman told Reuters in late March before launching the service.
Schulman believes that cryptocurrencies will become a funding source rather than just an asset class or an investment. If so, an altcoin like Litecoin would benefit from such a transition.
I’ve said in past articles writing about cryptocurrencies that utility is a critical component of any that I would recommend. Cardano (CCC:ADA-USD) certainly fits that bill.
As for Litecoin, I haven’t studied it close enough to know what utility it has beyond being an alternative currency for peer-to-peer transactions, but I’ll get there.
Is Litecoin Rudderless?
Having never written about Litecoin before, I had no idea that its creator, Charlie Lee, sold all of his Litecoin in 2017 to avoid a possible conflict of interest upon returning to run the Litecoin Foundation full time.
Some people might view this as a lack of commitment or belief in the cryptocurrency. However, I generally avoid owning stocks as a rule to eliminate any conflicts over companies I’m writing about.
But, as Charlie Lee stated in 2017, he would continue to put his heart and soul into the Litecoin Foundation.
“Don’t worry. I’m not quitting Litecoin. I will still spend all my time working on Litecoin,” Lee stated in December 2017.
“When Litecoin succeeds, I will still be rewarded in lots of different ways, just not directly via ownership of coins. I now believe this is the best way for me to continue to oversee Litecoin’s growth.”
Recently, Charlie Lee joined the BTCS (OTCMKTS:BTCS) board, a digital asset and blockchain technology company that’s created a staking-as-a-service platform to validate blockchain transactions. It’s also developing a digital asset data analytics platform so buyers of multiple cryptocurrencies can consolidate their trades onto one platform.
As decentralized finance and open banking grow, crypto leadership must get out and work with companies like BTCS to solve real-world problems.
If BTCS stock has a 20-day averaging closing price of $2.515 on April 1, 2022, Lee will see 175,000 five-year options vest with an exercise price of $1.03. That’s potentially worth at least $260,000. If it hits the Nasdaq, he gets $50,000 in annual pay, plus 75,000 restricted stock units, in addition to the 175,000 options.
Needless to say, Litecoin proponents need not worry about Lee’s financial situation, which means he’s not going anywhere soon.
The Bottom Line
Litecoin supporters bring up three things when promoting LTC.
First, it has a hard cap of 84 million LTC, four times the supply of Bitcoin. Secondly, the time it takes to create a new block is 2.5 minutes, one-quarter the time of Bitcoin, making it much better for sending and receiving. Lastly, it has very low fees.
As long as LTC trades below $1,000, it remains a useful altcoin for undertaking transactions. As for utility beyond cheap fees and faster transactions, I don’t see it.
Although most cryptocurrencies are in a bit of a funk right now, they’ll soon go on another run higher. Buying on 50% drawdowns over the next few years should be a smart plan.
The question you need to answer is whether Litecoin is the horse you should back over the long haul.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.