Bitcoin investors are looking to another proof-of-work token, Litecoin, for proof that its upcoming “halvening” could significantly boost prices next year.
A proof-of-work token means it relies on miners to solve puzzles to create new blocks in its chain. In order to limit the number of tokens issued, next month, the protocol backing Litecoin plans to cut rewards issued to miners for successfully solving a puzzle and adding a block.
The prospect of its upcoming halvening has already led to a rally in the price of Litecoin, which is up 22% over the past month and 81% over the past 12 months.
Litecoin’s performance has given Bitcoin investors more confidence that the most popular cryptocurrency’s own halvening—set to take place around April 2024—will also give the coin a much-needed boost.
Bitcoin prices have jumped following past halvenings, which occur every four years. Near the start of the year, it was trading at around $16,000, and it's nearly doubled since then, trading around $30,000 over the past month.
Bitcoin reached a 52-week high late last month after BlackRock, the world’s largest asset manager, filed an application to create a spot Bitcoin ETF. Other institutional players like Fidelity soon followed. Last week, the cryptocurrency again reached its highest point in more than a year after BlackRock CEO Larry Fink endorsed crypto and called Bitcoin an “international asset” in a TV interview.
Both Bitcoin and Litecoin also got a boost when EDX Markets, a new crypto exchange backed by Citadel Securities, Fidelity, and Charles Schwab, included the tokens as two of only four that it plans to offer its customers at launch.
Still, the broader crypto market, often correlated with the performance of stocks, has stalled as investors fear another interest rate hike by the Federal Reserve following better-than-expected jobs numbers last week. All major indexes ended the week in the red.
On Monday, Bitcoin was trading up less than 1%, at about $30,200, and Litecoin was down 2%, to $94.80.
