According to data recorded on the blockchain, there has been an increase in the usage of Litecoin, indicating that investors who invest in Bitcoin may be utilizing Litecoin’s affordable transaction fees to their benefit.
The Bitcoin network has experienced a surge in transaction fees due to its high level of blockchain activity. The increased activity can be attributed to the emergence of BRC-20 tokens, fungible tokens created on the chain utilizing the Ordinals protocol.
Many meme coins have emerged that use this technique (particularly Pepe Coin (PEPE), which has achieved exceptionally quick adoption). Hence the chain has seen a high amount of transfers.
During periods of network congestion, investors are compelled to pay exorbitant transaction fees to increase the chances of their transfers being processed swiftly.
Normally, investors are willing to pay higher fees when mempool waiting periods are extended, but the congestion has been at historical levels. Thus, the rivalry to verify transactions is exceptionally fierce, increasing prices.
Litecoin Benefits From Bitcoin Network Congestion As Holders Seek Faster Transactions
Some holders may temporarily switch to other blockchains. Santiment, an on-chain analytics firm, reports that Litecoin has reaped the rewards of the Bitcoin congestion. It is renowned for its swift transactions and minimal fees. This outcome is not unexpected.
The blockchain’s daily transaction volume demonstrates the primary indication of this phenomenon. A chart that depicts the current trend in this LTC metric is provided below.
The graph above shows that the total number of Litecoin transactions on the blockchain has lately increased significantly. The date of this spike corresponds to the congestion on the Bitcoin network. Therefore, it appears logical to assume that the two are related.
A further modification that has taken place on the LTC network can be observed in the supply retained by investors who possess a wallet balance ranging from 0-1,000 LTC. The chart presented below emphasizes this point.
The graph shows that the supply of these little Litecoin holders has been quickly expanding in the last week or two. This shows that these retail investors have lately accumulated.
The chart also includes information regarding the supplies owned by the 10,000-100,000 coins and 100,000-1,000,000 coins groups. These groups are typically referred to as the sharks and whales, respectively. These large-scale investors have experienced only minor supply changes during this time frame.
Solely minor investors may be transitioning from Bitcoin to Litecoin since the advantages of a reduced transaction fee would be more significant for holders who make smaller payments. This is evidenced by the fact that sharks and whales possess such large volumes that even high fees would have a negligible impact and have not been significantly affected.
Litecoin (LTC) Price
As of this writing, Litecoin is traded at $79.05, indicating a 6% decrease over the last week.
Related Reading: | BRC-20 Coins Take Aim at Bitcoin as Fees Skyrocket, Analyst Suggests |