Tether (USDT) Flips Litecoin (LTC) In a Sign of the Times
Cryptocurrency, Litecoin (LTC), Tether (USDT)–As the crypto markets fall into another price rout to kick off the final month of the year, with the price of Bitcoin dropping below $3800, controversial stablecoin USDT has managed to flip Litecoin to become the seventh largest cryptocurrency by market capitalization.
Litecoin, the invention of industry mainstay Charlie Lee and often described as the silver to Bitcoin’s gold, has been in near continuous price fall since reaching an all time high of $350 in December 2017. While the coin has tracked value of Bitcoin closely over the year, moving in a similar direction as the number one currency by market capitalization, it was a series of related events that set off the precipitous price fall last December which led to the 91 percent drop in value.
The rise of Bitcoin Cash including the Coinbase listing fiasco led to a fast erosion of BTC pricing, as investors became unsure of which coin would reign supreme following the bull run. This had subsequent effects on LTC pricing, which, as previously mentioned, has typically moved in price alongside Bitcoin. In addition, founder Charlie Lee, who had established himself as an integral and beloved leader for the currency and community of LTC, announced he had sold his entire holding of the coin and would gradually be making efforts to distance himself from the project in an effort to promote decentralization. Charlie also made a series of Twitter posts cautioning investors to not get too greedy in the bull run, and to expect a severe bear market following that could last for several years (a prediction which has proven salient in the closing month of 2018.
While some came to the defense of Lee, stating that his actions would benefit Litecoin in the long-run by removing himself as the focal point for the currency, many investors felt that Lee had acted irresponsibly with his announcements, in particular given the timing of the sell-off coinciding with LTC reaching an all time high. The end result was a disastrous drop in price, similar to that experienced by nearly all altcoins throughout 2018, with the price of LTC extending well below what it traded for midway through last year.
Tether, the parent company behind USDT, has not been without its share of controversy this year despite seeing its token climb the ranks of market capitalization. USDT, unlike most cryptocurrencies, has its value pegged to that of a single U.S. dollar. While the currency is supposed to backed 1:1 with dollars held in reserve by Tether, a series of investigations and self-auditing has failed to provide definitive proof to investors, even with the company changing banks in November.
Given the severity of the bear market throughout 2018, it’s unsurprising that more development focus is switching away from market-valued cryptocurrencies to coins that provide similar features but with the price stability of an external source. Last month, EWN reported on a gold-backed stablecoin being featured in an article by Bloomberg on the the best investment advice for 2019. Just yesterday, Chinese crypto billionaire Li Xioalai provided an update on his position leading up a new stablecoin, despite previously making remarks that he would no longer invest in blockchain projects due to corruption.
While cryptocurrency adoption remains on the rise with most community members optimistic for 2019 and beyond, the rise of stablecoins could continue a trend that sees price-unstable coins, such as Bitcoin and Litecoin, failing to find favor for developers and those accepting the coins for marketplace transactions.