ForexMinute.com – For a cryptocurrency that was once termed as the next-best to Bitcoin, Litecoin certainly looks like an underachiever. Like Bitcoin itself, this silver coin came to fame by riding high on hypes. And certainly it had its share of success in the initial stages, thanks to the widespread media coverage it received by leading media houses. The coin however failed to live up to the hype in later stages due to a range of distresses – one among them is associated with the advanced Scrypt based mining equipment.
When this equipment was neatly introduced as a better alternative to the existing GPU mining rigs, a huge flock of miners broke their piggybanks to buy them at high prices. There they hoped that Litecoin value will somewhat go “to the moon” that will at least recover their investments within a blink. Now there were two type of miners – ones who actually believed in Litecoin and others who were hoping to liquidate their mining to make as much profit as they can. Unfortunately, the latter turned out to be in the majority.
Why would a miner short his Litecoins as soon as he/she mines it? Upon the arrival of ASICs, most of the miners were hugely in debt after buying the equipment for over $10,000. Other costs in starting these mining machines included electricity, rent, internet access, as well as credit card interests. So indeed a normal person could have wanted to get over these expenses once-for-all. These investments were made keeping a naïve thought in mind that the LTC prices will rocket in the future. Unfortunately, this didn’t happen.
As the ASIC miners began to mine and short Litecoin at excessive rates, the supply of the coins somewhat overran the demand. Thus, the coin’s value began to fall gradually. It further narrowed down the miners’ ROI, making them sell their holdings as well. A broad view tells that supply was much-much greater than demand, resulting in the drop in LTC market cap and price.
At present, we think the shift is now more towards holding the Litecoins rather dumping them into the market. The LTC currently is being traded in its all-time-low zone, and there is no way miners can earn profits from such cheap selling. Margin trading is another thing that is gradually eating the Litecoin, and the entire cryptocurrency sector, from inside.
As the mining difficulty increases in the future, there is a huge chance that miners would want to move towards mining other profitable altcoins. The only solution here is to either reduce production costs, or adopt a bullish attitude to pump the currency. Holding is another way to at least control the selling pressure. In these times, what Litecoin needs is greater community support to actually prove itself as a better alternative to Bitcoin – a cryptocurrency which itself is suffering from major falls nowadays.
To contact the reporter of the story: Yashu Gola at firstname.lastname@example.org