Supporters of litecoin often tout the sixth-largest cryptocurrency as “silver to bitcoin’s digital gold,” but one cryptocurrency says it’s also a diamond in the rough.
Writing in an eight-page report published on Tuesday, eToro senior market analyst Mati Greenspan argues that the litecoin price is trading at a “massive discount to what it should be worth.”
Greenspan bases this assessment and several technical and fundamental factors.
On the technical side, he notes the importance of Litecoin, a Proof-of-Work (PoW) blockchain, being the dominant coin mined using the scrypt algorithm. As long as this remains the case, Litecoin will remain highly-resistant to 51 percent attacks since there is not enough surplus hashpower to mount an assault on its network.
He also lauds Litecoin’s developers for structuring the cryptocurrency as a complement to Bitcoin rather than a competitor, enabling LTC to tether itself to the flagship cryptocurrency by adopting innovations such as Segregated Witness (SegWit) and the Lightning Network (LN).
Adoption and other Fundamentals
Greenspan further argues that litecoin has achieved more widespread adoption than many of its peers with comparable or greater valuations. LTC, for instance, has more than double the daily active addresses (DAU) of bitcoin cash (BCH), the fourth-largest cryptocurrency with a market cap roughly three times the size of litecoin’s valuation.
In fact, litecoin’s market cap to DAU ratio is among the lowest in the large-cap cryptocurrency index, suggesting that the litecoin price is discounted relative to the coin’s present level of adoption.
Recent announcements, such as the Litecoin Foundation’s purchase of a 9.9 percent stake in German financial institution WEG Bank, could further bolster LTC’s rate of adoption.
Noting that the present bear market has driven down cryptocurrency prices in relatively indiscriminate measures, Greenspan speculates that litecoin as an individual asset was oversold relative to its fundamentals. That’s particularly true since the litecoin price has fallen approximately 81 percent from its all-time high, outpacing the 71 percent hit taken by the market as a whole.
“Given that Litecoin has an established and stable working product, as well as significant adoption, this bear market of the whole cryptocurrency industry could have lead to Litecoin being oversold,” he concludes.
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