Litecoin (LTC) is experiencing a major on-chain drawdown as holders seem to be offloading their bags.
According to Santiment, 199,000 wallets that held Litecoin about 10 days ago no longer hold the digital currency. This trend might account for the relatively poor performance of the coin over the past week and for the year, compared to other top cryptocurrencies profiled earlier.
Trading at $72.90, it has lost about 2.1% of its price over the past 24 hours at the time of writing, a slump that has also impacted its market capitalization, which has recently declined to $5,391,113,193.
Litecoin Exodus May Be a Blessing in Disguise
The 199,000 drop in total wallets holding LTC is the biggest recorded since October 2022. Another crucially concerning trend is that LTC’s market value has dropped by 55% against Bitcoin.
Per the chart presented, as many as 2.13% of all Litecoin wallets have liquidated their LTC since late November. At the moment, at least 9.11 million addresses are holding at least 0 coins on the Litecoin network.
⚡️ Approximately 199K wallets that held $LTC 10 days ago, no longer hold any coins. This is the biggest drop in wallets since October 2022. $LTC's market value vs. $BTC has dropped -55% in 5 months, but #FUD & small wallets dropping could turn this around. https://t.co/tIAj6ULd95 pic.twitter.com/SuhqULLfFm
— Santiment (@santimentfeed) December 7, 2023
An interesting discovery made by Santiment is that the addresses selling LTC are for the small HODLers while the whales and sharks in the ecosystem are holding steady.
Notably, on-chain trends like this where there is a perceived selloff can trigger Fear, Uncertainty, and Doubt (FUD) which may usher in an even bigger selloff.
To Santiment, this trend may promptly come with a revival as tokens sold by small wallets generally find their way back into the hands of sharks and whales whose HODLing strength can help spark a recovery.
Halving Effect Waned Too Quickly
Litecoin’s relatively poor performance at this time is shocking, considering the number of predictions that went out ahead of its latest Halving cycle that took place in August.
With the Litecoin rewards slashed from 12.5 LTC to 6.25 LTC, it has effectively deflated the rate of emission of the digital currency. Demand has not been sustained since the halving, considering how hype quickly shifted toward XRP amid Judge Analisa Torres’ July ruling.
Emerging Bitcoin spot ETF conversation also notably shifted the focus away from Litecoin to BTC, a trend that has made the latter bag up to 165% growth Year-to-Date (YTD).