Updated: Sep 10, 2022
If you have been in crypto long enough you know that Litecoin has been undervalued in price against USD and against Bitcoin. Is this justified? Is the market perhaps mispricing Litecoin?
Well, let's look at the network adoption and usage over the last 10+ years. One would think that actual usage and increasing network effects would be a great way to value a cryptocurrency network.
Let's look at the Litecoin network vs the Bitcoin network and compare the litecoin price performance.
We can compare the total number of addresses, the total number of transactions, and the total number of new addresses added daily for each network and overlay it against the historical litecoin price in dollars.
Total network addresses:
Litecoin total addresses: 153M
Bitcoin total addresses: 1.02B
LTCBTC equivalent .0375
LTCUSD equivalent: $719 at Bitcoin price of $19,194
New addresses per day:
Litecoin new addresses per day: 166.8k
Bitcoin new addresses per day: 416.9k
LTCBTC equivalent .10
LTCUSD equivalent: $1,919 at Bitcoin price of $19,194
The total transactions:
Litecoin transactions per day: 111k
Bitcoin transactions per day: 264k
LTCBTC equivalent .105
LTCUSD equivalent: $2,015 at Bitcoin price of $19,194
The charts above show that Litecoin's network value is in the range of $700 - $2000 at today's Bitcoin price.
We can also see that the price was correlated with the adoption rates and usage of both networks early on. However, after 2019 the divergence from utility and adoption from price started to grow. This also coincides with a 4-year downtrend of the LTCBTC ratio. Which shows the disconnect from Litecoin's true network value.
What happens if the LTCBTC ratio returns back to a more fair value based on network usage? With values in the .0375 to .105 LTCBTC range? It looks like Litecoin has bottomed very similar to spring 2017 right before Litecoin broke out on the USD and BTC pair.
At these levels, Litecoin would be worth several thousand dollars. It's not unreasonable to think that could happen and it could happen in a short amount of time similar to the LTCBTC breakout in early 2017.
Many investors can only dream of an opportunity for an asset with such a wide upside between value and price. Not to mention, the other fundamentals and qualities that Litecoin possesses.
What will be the tipping point? Perhaps an announcement at the Litecoin Summit or Litecoin's third halving next year or maybe it's an announcement from Amazon or Walmart or it is the roll-out of mobile wallets supporting Litecoin MWEB an upgrade adding privacy, scalability, and fungibility to Litecoin. Or it is all of the above that will be the catalyst.