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Litecoin (CCC:LTC-USD) is one of the most widely followed altcoins. Despite the ongoing downtrend in altcoins, LTC is up 8% so far in 2021. Its 52-week price range has been $41.47 to $412.96, and Litecoin trades for about $136 at this writing.
Along with electric vehicles, green energy companies and marijuana stocks, many digital currencies have seen eye-popping returns in the past year. But risk-averse investors may find the volatility of cryptocurrencies too much to accept in their portfolio.
Yet, for young investors with time on their side, short-term choppiness matters a lot less than long-term growth potential. And Litecoin could provide significant returns in the long run.
Despite the weak momentum at present, altcoins might gradually stabilize and recover in the coming months. If you are a long-term investor whose risk/return profile allows for buying cryptos, you could consider investing in Litecoin around these levels.
Litecoin Versus Other Cryptos and Stocks
With a market capitalization of slightly $9.4 billion, Litecoin is among the top 15 cryptos. By comparison, market caps of several other digital assets and stocks in different industries are:
- Bitcoin (CCC:BTC-USD) — market cap of $652.2 billion, and up 14% YTD;
- Binance Coin (CCC:BNB-USD) — market cap of $45.9 billion, and up 753% YTD;
- Dogecoin (CCC:DOGE-USD) — market cap of $31.1 billion, and up 3,630% YTD;
- Ripple (CCC:XRP-USD) — market cap of $67.5 billion, and up 168% YTD;
- BlackBerry (NYSE:BB) — market cap of $6.9 billion, and up 77% YTD;
- GrowGeneration (NASDAQ:GRWG) — market cap of $2.9 billion, and up 12% YTD;
- Intel (NASDAQ:INTC) — market cap of $229.2 billion, and up 11% YTD;
- Tesla (NASDAQ:TSLA) — market cap of $643.5 billion, and down 7% YTD.
These names show us how far the crypto space has grown in the past decade, even taking over the size of some of the established companies worldwide.
How Litecoin Differs From Bitcoin
Litecoin was created in 2011 by Charlie Lee, a former employee of Google’s parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). As a Bitcoin-derived protocol, it shares many of the Bitcoin features. However, focusing on higher speed, efficiency, and broader distribution than Bitcoin, Lee increased the total supply and changed the rate at which new blocks are added to the blockchain.
According to research by Jessica L. Leath at the University of Tennessee at Chattanooga, the Litecoin network “was built on the basic framework provided by Bitcoin, but separated itself by allowing mining transactions, the process of verifying and recording transactions to the blockchain, to be approved every two and a half minutes, as opposed to Bitcoin’s ten-minute approval time. In addition, Litecoin offers a maximum circulation of 84 million coins, while Bitcoin is limited to just 21.”
Speedy transactions have led to Wall Street names noticing Litecoin. For instance, Paypal (NASDAQ:PYPL) has recently launched “Checkout with Crypto” for U.S. based users. Now, Venmo, the mobile payment app owned by PayPal, accepts several digital currencies, including Bitcoin, Litecoin, Ethereum (CCC:ETH-USD), and Bitcoin Cash (CCC:BCH-USD).
Global payments technology giants Mastercard (NYSE:MA) and Visa (NYSE:V) have also taken steps to incorporate digital assets into their payment-processing platforms. Such endorsements by payment leaders reinforce the bullish momentum for and investor interest in altcoins, including Litecoin.
Like Bitcoin, LTC uses a proof-of-work (PoW) consensus algorithm “to deter denial of service attacks, abuses such as spam or in case of cryptocurrencies.” However, PoW is not eco-friendly as it consumes significant energy to produce a single token.
Believers in LTC hope that it will soon shift to a proof-of-stake (PoS) algorithm for sustainability. The effect of cryptos on the environment gets increased headlines.
In May, Elon Musk, CEO of Tesla tweeted that the company will no longer accept Bitcoin as a form of payment. A month later, he stated Tesla would allow transactions in BTC once mining is done with more clean energy. The second half of the year will likely bring increased discussion on the environmental impact of digital assets.
In the meantime, Litecoin lead developer David Burkett indicated the network’s plan to launch a MimbleWimble update by late 2021. The upgrade should mean enhanced privacy and faster transactions.
The Bottom Line on LTC
Despite the recent sell-off in altcoins, growth predictions for Litecoin are primarily optimistic. This is because the adaptation to crypto payments is steadily increasing.
The price of Litecoin is highly correlated with Bitcoin price fluctuations. Therefore, short-term volatility is to be expected. However, buy-and-hold investors could regard declines in price as an excellent opportunity to buy Litecoin for the long run.
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.