The booming trade of cryptocurrencies has given a rise to many lucrative altcoins. These virtual coins, which are not under the control of any central authority, use blockchain technology for decentralized, transparent transactions. From Bitcoin (BTC) to Dogecoin (DOGE), this sector is heating up. Though the entire world of digital currencies is complex by nature, Litecoin (LTC) is one of the altcoins that has gained momentum among investors.
Introduced in Oct. 2011 by a software engineer, Charlie Lee, Litecoin is a peer-to-peer cryptocurrency that enables instant, near-zero cost payments to anyone globally. The idea behind the launch was to make the coin available to the average person without any complicated hardware.
With lower transaction costs and faster payments compared to BTC, the most popular and the largest by market cap, Litecoin has gained popularity over the years. A new block in Litecoin is generated every 2.5 minutes, rather than 10 minutes as with BTC. Moreover, a total of 84 million Litecoins can be mined, compared to 21 million Bitcoins. Currently, Litecoin has 79% of its capacity circulating in the market.
With a market cap of over $21 billion and a volume of more than $10 billion in the last 24 hours, Litecoin is currently ranked the twelfth largest cryptocurrency by market cap. Notably, over the past year, the price of the coin has ranged from a low of $40.66 to a high of $412.96 and is currently trading at $328, down 15.3% in the last 24 hours.
Major international economies are still not in favor and remain skeptical about cryptocurrencies. With Bitcoin and other altcoins gradually gaining popularity and leading to institutional endorsements, regulations for cryptocurrencies are also on an uptrend.
Recent Moves in the Crypto Market
Following Tesla Inc. (TSLA) CEO Elon Musk’s suspension of Tesla purchases using Bitcoin after voicing concerns over the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions,” stocks having exposure to Bitcoin plunged. “We believe it has a promising future,” Musk said, “but this cannot come at great cost to the environment.”
Musk’s move is likely to impact the sentiment of stock investors betting on digital currency. Notably, earlier this year, Tesla’s revelation of buying $1.5 billion Bitcoin and accepting it as a payment acted as a catalyst for the cryptocurrency market.
In the last 24 hours, the cryptocurrency market has slumped with all of the top 20 largest assets by market cap trading in the red. To name a few, Ethereum (ETH), Binance Coin (BNB), Dogecoin (DOGE), Ripple (XRP), and Bitcoin Cash (BCH), along with Bitcoin had dropped more than 10%, at the time of writing.
NANO, SNX, and KSM, on the other hand, were among the few coins to have increased in value over the past 24 hours, rising 50%, 13%, and 11%, respectively.
According to a Facts and Factors market research report in April, the global cryptocurrency market is anticipated to be worth more than $5,190.62 million by 2026. The market was worth $792.53 million in 2019, giving it an expected compounded annual growth rate (CAGR) of 30% between 2019 and 2026.
As cryptocurrencies dipped, companies with exposure to cryptocurrency prices have also borne the brunt of disappointed investors. For example, Coinbase Global (COIN), which operates as a cryptocurrency exchange platform, declined 4.8% in Wednesday’s extended trading session after closing 6.4% lower on the day.
The company is expected to report first-quarter results on May 13 after the market closes. Analysts expect the company to report EPS of $3.07 on revenues of $1.814 billion.
On May 11, Oppenheimer analyst Owen Lau initiated coverage on the stock with a Buy rating and a price target of $434 (53% upside potential), based on the view that Coinbase is an “enabler of crypto innovation.”
On May 5, Mizuho Securities analyst Dan Dolev reiterated a Hold rating and a price target of $315 (11% upside potential) on the stock.
Dolev said, “FIS announced that it is enabling banks to offer their customers the ability to buy, sell, and hold Bitcoin via their bank accounts. In our view, this helps democratize and validate Bitcoin, as it enables bank clients to buy Bitcoin without the need of often unregulated FinTech apps. We believe that offering ubiquitous access to Bitcoin helps validate the category, but it also potentially drives pressure on trading fees, which may weigh on COIN.”
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 6 Buys and 3 Holds. The average analyst price target of $435.33 implies 53.5% upside potential to current levels.
Furthermore, TipRanks data shows that financial blogger opinions are 63% Bullish on COIN, compared to a sector average of 68%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.