420 Dollar Per Coin: Comparing The Volatility Of Litecoin With Other Assets Shows Its Growth Potential
Some time ago, I analyzed the price potentials of Bitcoin and Ethereum as well as for Steem Dollar, which I will now repeat for Litecoin.
My approach was to compare their average volatility with the average volatility of the classic assets gold, the TecDAX and the Dollar price in Euro. They all represent an aspect of crypto currencies and they all are mature assets which in difference to crypto currencies have already reached their equilibrium.
As conclusion, I fond out that all three cryptos still have a lot of potential. For Bitcoin and Ethereum it is twice to eight times the value they had when I analyzed them and for Steem Dollar, the possible maximum was even four to 20 times of the price back then.
Another conclusion was that apparently, the speculation pattern for cryptos strictly follows central bank decisions as it is the case with classic assets. The difference is that they react the other way around. While the volatility for classic assets was higher with low interest rates and the hike caused a reduction of the price fluctuations, the price of cryptos started being more volatile after the hike. Both, volatility and price went up.
This means, that apparently the market for cryptos follows the same rational (or irrational) thinking as it is the case with classic assets.
Looking At Litecoin, I See Pretty Much The Same Pattern
The average daily volatility of Litecoin before the hike of the interest rates by the Federal Reserve in March of this year was about 2.3% while it was about 1.25% for the three classic assets.
After the hike the volatility of the Litecoin jumped to 9.5% while the one for the classic assets declined to 0.75%.
This indicates a longterm gap of about 3 to 7.5 times the current Litecoin price. Right now, it is about 55 Dollar per coin, which means we could see a increase to about 170-420 Dollar for Litecoin.
The effective price will quite likely be heavily depending on the interest rates. It seems as if constant or lower interest rates would lead to a lower price target, while further increases of the interest rate could push the price of Litecoin (and other cryptos) to its upper limit.
Good post
Ich fand Litecoin schon immer sympathisch. Ich fand aber auch schon Silber immer hübscher anzusehen als Gold. :-)
Momentan leiden meiner Meinung nach alle Altcoins an Bitcoin. Verstärkt durch die Hardforks und der Hoffnung auf zusätzliche kostenlose Coins, kommen die allermeisten Altcoins und ihre Vorteile nicht zur Geltung. Bei Litecoin wären dies u.a. niedrige Gebühren und schnelle Transaktion.
Ich persönlich glaube an Litecoin und ich bin zuversichtlich, dass seine Zeit noch kommen wird.
Volatility is the reflection of sentiment and so it too will correlate with other TA methods. Your analysis is quite good.
My Elliott Wave Counts and Chart Patterns show similar targets because they too measure price which is a reflection of sentiment.
However, there is a famous saying: "What are words but symbols of symbols, hence twice removed from reality."
To that end, our methods are twice removed from true thought that drives sentiment which drives price/volatility/correlation. Thus, can never be perfect.
Thanks for the answer. The method is a rule of thumb, I guess, but surely no exact science. When you consider that I compare percentages and not real values, it is not twice but even three times removed from reality;-)
What gives me confidence in the number is the fact that we both came to the same conclusion using very different methods (you: the price and it's peaks, I: the average volatility). This gives the whole assessment a robust impression, as I think.
I think your analysis is valid. LTC is one of my larger holdings and I believe in Charlie Lee. The blockchain he is developing, which is on bitcoin, allows him to piggy back the advancements bitcoin makes. At the same time, he is looking to add things such as vaults and smart contracts, much sooner than bitcoin.
As with all cryptos, the entire market should get a lift when Wall Street starts rolling in. This means a lot of money will be spread all over the place. I dont see LTC getting the same attention as BTC but it will get some. That means money flowing into it.
When do you think will it happen that Wall Street enters the market beyond the test balloon level?
My impression is that it might be with a (potential) next hike in interest rates by the FED, since the previous development seems to have been so closely connected to it. And here comes politics into play: What if Trumps new candidate wants rising volatility for classic assets (=constant/lower interest rates again) but not for cryptos? Or am I looking here at a correlation without (strong) causality?
I think it is already starting. There were 80_ hedge funds set up so far this year to buy cryptocurrencies. When they are funded and start buying, I would say at some point in 2018.
Plus, I believe all the rhetoric by the bankers shows they are about to go on a buying spree. Some already are picking up coins like Morgan Stanly and JPM (although they might be for clients). Either way, the attack by the bankers means they will certainly try to monopolize this market by buying up what they can.
As for the correlation, I dont think there is enough of a track record as of yet since the Crypto market is still in its infancy. It is simply too small to draw any conclusions. It is under $200B....other markets are trillions....
Thanks for that. Didn't know about the hedge fund waiting line. If they go for it at once, it could disrupt the entire market and drive prices to prohibitive level. That would trigger another wave of half-baked forks to cover the demand. I really hope this won't happen.
img credz: pixabay.com
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