Litecoin Trading Strategy: Backtest and How to Trade It
The amount of tradable assets in the crypto market is enough to overwhelm experienced investors. While many focus on Bitcoin, the most valued cryptocurrency, it might be too expensive for beginner investors. Thankfully, Litecoin, considered by many as the silver of cryptocurrency, is a great alternative. So, what is your Litecoin trading strategy?
A Litecoin trading strategy involves buying and selling Litecoin in the hope of making a profit. Litecoin is a decentralized cryptocurrency that is used for peer-to-peer transactions.
Launched in October 2011 and inspired by Bitcoin, Litecoin was among the earliest altcoins, offering lower transaction fees, faster transaction confirmations, and faster mining difficulty retargeting. Litecoin is currently among the top 20 coins by market cap as of 2022.
In this post, we take a look at Litecoin. We end the article with a backtest of a Litecoin trading strategy.
Litecoin strategy video
What is Litecoin?
Litecoin is a decentralized cryptocurrency that is used for peer-to-peer transactions. Launched in October 2011 and inspired by Bitcoin, Litecoin was among the earliest altcoins created out of the Bitcoin codebase. Compared to Bitcoin, it offers lower transaction fees, faster transaction confirmations, and faster mining difficulty retargeting. Litecoin is currently among the top 20 coins by market cap as of 2022.
Litecoin is produced through mining like other cryptocurrencies, and it has a limited supply in circulation — no more than 84 million of them, just like Bitcoin’s 21 million. Litecoin has an advantage over Bitcoin in the area of block time. Typically, Bitcoin has a block time of 10 minutes, whereas Litecoin has a reduced block time of 2.5 minutes with a lower transaction fee.
How has the Litecoin market fared so far?
As with most coins, Litecoin has its share of advances and declines. The first significant win for Litecoin came in late 2013 when the price surged over 1,700 percent, which saw Litecoin explode from $2 to $40 within just a few days. Regrettably, this rally never lived to see the next year as it was cut short in December of the same year.
The drop continued till 2014 and gained more momentum, thanks to the Mt. Gox crypto scandal that dragged the price of Bitcoin down by a huge 36% with all other coins in tandem. Eventually, Litecoin recorded an all-time low of $1.11 on Jan 15th, 2015.
The price of Litecoin has been growing and ebbing up till this moment. It reached an all-time high of $225.79 following the surge of Bitcoin in May 2021 but has declined since November 2021, like other cryptocurrencies.