Following an unprecedented day of trading for Litecoin at a higher daily USD volume than bitcoin, suspicions of a ‘pump-and-dump’ scheme in China have arisen following a correction in price.
Chinese pyramid scheme?
Just before, Litecoin has gained fifty US cents to a full US dollar in value – tantamount to Mazda selling more cars in a day than Toyota.
Reasons for these sweeping changes are as varied and unique as the current economic situations of our time. Massive new volume is coming into Litecoin from the Chinese markets, which may indicate a pyramid scheme or a short-term “pump-and-dump” are in play.
Over the next week or so, it may become apparent if this is the primary factor if the Litecoin market drops suddenly and trading in China stops suddenly in lockstep. Rumors of Dash being the next target market to inflate after Litecoin has also been referenced in meetings in China, according to 8btc.com and BitcoinTalk.org forums.
Trepidation from the recent spam attack on Bitcoin and transactional inaccuracies may be moving the market towards Litecoin in the short-term until Bitcoin’s protocol functions normally again. Obviously, the issues in Greece are playing an important role int the global values of the top crypto-currencies. Litecoin creator Charlie Lee believes the reasons are fundamental to Litecoin’s value itself.
“I think Litecoin is still very complimentary to Bitcoin — silver to Bitcoin’s gold if you will. Because Litecoin is an altcoin and a much smaller market cap, the Litecoin price is extremely volatile. So when the crypto currency market is crashing, it gets hit a lot harder than Bitcoin. And when it’s going up, Litecoin does extremely well. In the past month, Bitcoin has gone up about 20%, whereas Litecoin has gone up about 400%!”
Halving of production other factors
The fast-approaching halving of Litecoin production next month, estimated to occur around August 25 has been cited as one reason for the increase in interest. As production will drop next month, values are expected to increase with the drop in overall supply, with Bitcoin expecting its own halving next summer.
Additionally, since the markets have grown tremendously since the last halving of any major crypto-currency, the market effects are more pronounced today than ever before.
Also, the vast increase in digital currency interest throughout the European Union may also be a key factor. Many people that are new to digital currency, and low on cash, may favor the inexpensive Litecoin to start an investment. A unit bias and low prices of around US$5 to US$7 apiece may help Litecoin compete directly against bitcoin for new consumers, which is almost 40 times more expensive. In other words, new buyers may be more interested in holding 100 LTC than 2.5 BTC.
The recent correction of this market surge might be pointing to massive market manipulation, so invest wisely. CoinTelegraph will follow this story and provide readers with the latest market updates.
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