In the crypto market, all eyes are on Bitcoin (BTC -0.04%), and for good reason. Not only is it the largest crypto by market capitalization, but it is also historically the only crypto that leads the market both high and low. This creates the opportunity for some cryptos to trade under the radar of investors who are too busy watching Bitcoin.
This could be the current situation with Litecoin (SLD -1.09%) and Dash (DASH -1.07%), which have risen steadily over the past month at a time when Bitcoin is losing momentum. Litecoin is up 39.70% over the past 30 days, while Dash is up 8.13% over the same period. In contrast, Bitcoin is down 16.68%.
What do all these pieces have in common?
Litecoin and Dash are based on the same cryptocurrency technology used to create Bitcoin. While Bitcoin was launched as the original cryptocurrency in 2009, Litecoin was launched two years later as a “lite” version, hence its name. Litecoin’s goal was simply to improve on what Bitcoin already offered in terms of faster and cheaper payments.
The story is similar for Dash, which launched in 2014 as a fork of Litecoin. This means that the original blockchain developers behind Litecoin decided to split the main blockchain and name the new Dash.
Image source: Getty Images.
The fact that the three cryptos are related is significant because it means that all three are based on roughly the same proof-of-work blockchain technology that relies on mining to create new blocks for the blockchain.
This also means that these three coins undergo a process known as “halving” on an algorithmically defined schedule. In a halving, the block reward for miners is halved. Bitcoin undergoes a halving every four years, just like Litecoin. Dash is halved once every 365 days, as the block reward is reduced by only 7.14%, not 50%.
How to take advantage of the halving
Historically, halving events have been very lucrative for traders and have always been highly anticipated by the crypto market. The easiest way to take advantage of these events is to buy 12-15 months before the next halving. Since the date of each halving is algorithmically determined, it is easy to determine when it will happen for each coin. The next Bitcoin halving is March 2024, the next Litecoin halving is July 2023, and the next Dash halving is May 2023.
Once you understand the timing of these halving events, it’s easy to see why Litecoin and Dash both seem to be diverging from Bitcoin right now. If historical patterns hold, one would expect Dash and Litecoin to benefit first from their respective halving events, and Bitcoin to lag behind by at least several months. Additionally, since the Dash halving is not as steep as the Litecoin halving (7.14% vs. 50%), one would also expect a bigger rise in the price of Litecoin. than Dash, which we see. Currently, traders expect Litecoin to see a 200% price surge when it comes to its next halving.
More potential than Bitcoin, but for how long?
For this reason, Litecoin and Dash might have more potential than Bitcoin in the short term. Crypto publications are already starting to talk about the “pre-halving rally” for Litecoin, which has only intensified the impact of this effect. Since Bitcoin’s halving won’t happen until 2024, it will likely trade sideways for the rest of this year and into early 2023. Thus, there is a very short-term window for Litecoin and Dash outperform Bitcoin. At a time when much of the crypto market is in the red, this could be a sneaky opportunity to profit from both Litecoin and Dash.
Long term, however, I’m still much more bullish on Bitcoin than on Litecoin or Dash. For example, some traders predict that Bitcoin could surge to $63,000 by March 2024 due to investors’ anticipation of the upcoming halving. If there’s one cryptocurrency to buy and hold for the long haul, it’s Bitcoin. But if you’re looking to round out your crypto portfolio by the end of the year, it might be worth taking a closer look at Litecoin and Dash.
