One of the plays for 2018 is if crypto can start to be adopted as an actual currency. This can be just peer to peer, or if there is integration with a large platform like Square or Paypal. Another option would be if a large retailer or group of retailers started accept crypto as a form of payment. If this happens, the coin (and to a lesser degree related coins) that is adopted will have a very good year.
Last year, we actually saw a decline in crypto acceptance with many retailers and processors reversing their earlier acceptance of Bitcoin due to fees. So this year, if crypto starts to be adopted, another currency may take the lead and Bitcoin will be left as a store of value coin, or digital gold.
This is one of the reasons I have had my eye on Litecoin, I even suggested it in similar article here before it jumped nearly $100. I know many people don’t like Litcoin and the main argument against it is that it simply doesn’t do anything special, but that is actually one of its strengths. It is simply a currency coin and if you are interested in a play that involves currency adoption, Litecoin is a strong choice and as we see, one of the few choices.
If you read this blog regularly, you will know I am not a big fan of TA, especially in crypto. TA tells you what markets are suppose to do, and crypto markets don’t always act like true markets. So instead I focus on fundamentals, and here are a few reasons I am bullish on Litecoin this year.
Brand – Regardless of what people say about Litecoin being a cheap copy of Bitcoin, it has a brand name that most in the business and retail world already know. There are many people touting new projects such as Nano as the currency of the future, but they have no name recognition outside of crypto nerd circles. No retailers or payment processors have any real interest in implementing Nano in the near future. There are simply not enough people who even know what it is and it is totally unproven in the real world. This is why if you are making a bet on a currency to be accepted, it has to be something like Litecoin that has a history that is proven and also has name recognition. There are very coins that fit this criteria.
Ease of access – As of now, Litecoin is one of the easier coins to get for regular people. More obscure coins require more effort and more knowledge for everyday people to purchase, store, and send. The only other coin that is as easy to get as Litecoin outside of BTC is Ethereum, but Ethereum isn’t a currency coin, so that leaves Litecoin as the winner in this category.
Scaling – I know some will argue with this fact, but Litecoin has the ability to scale. There are several technologies that it can use such as Lightning and Segwit. Litecoin also has faster block times so it shouldn’t run into issue like Bitcoin did as it increased in use and popularity, which led to retailers rethinking their acceptance.
Rumors – It should be obvious, but this is just a rumor and should not be the basis of your investment. However, all possible investments opportunities involve a bit of rumor. As for Litecoin, there were a lot of rumors that Charlie Lee had secured a deal with a large payment platform or retailer (Not Litepay). It was also rumored that he sold his holdings in Litecoin as a legal requirement for the deal going through sometime later this year, as holding a stake in LTC would be a conflict of interest due to the terms of the deal.
Of course, this is all rumor, but I have seen several sources that seem to believe this has a good probability of being true. Of course, only time will tell, but it is something to watch.
Pricing – Short term pricing is one of the few areas where I do use some charting and TA. If you simply want to add to your position, you could start dollar cost averaging now. However, to take a larger position, I would wait for a pull back to around $180, and start my buying there in small increments based on the conditions at that time, whether it be a market wide selloff or something different.
Of course, Litecoin has some negatives as well that need to be watched. One being the leader of the project Charlie Lee has sold all his holdings. Although that is one of the positive aspects I mentioned above as it relates to a rumor, the reality is he no longer has a financial incentive to make Litecoin succeed. This is troubling in the business world, however he has already made a fortune, so it’s not like he needed the money anyway. But this is still an issue moving forward if he loses interest.
Next we have competitors. I think there are several, but the main one is probably Bitcoin Cash and to a lesser extent, Monero. Bitcoin cash and Roger Ver have been pretty silent lately so it is hard to tell what he is planning. But he may make a big move with Bitcoin Cash pretty soon the way he did last year, so this would be something to watch out for. However, Ver seems to want Bitcoin Cash to replace Bitcoin, so price appears to be his main motive, with retail adoption taking second place. That probably has something to do with ego.
Finally, I already know many readers will see the names mentioned above and think they are all old and outdated tech and names such as Nano will replace them. But you have to understand, no large retailers or payment processors are going to touch those newer and unproven coins. Even if something like Nano does prove itself to be the currency of the future, it will take several years before the type of adoption we are talking about in this article will take place. It simply takes time for technology to be proven when it comes to money. These are not silly apps that just launch and fix the problems later because nobody cares. We are talking about money here, and it has to be proven over years before anyone will risk their business and hard earned money with it.
So if you believe that currency adoption will be a major story in 2018, Litecoin is a play you will want to keep an eye on if you are more interested in the larger cap coins. Of course, with any investment in crypto, you have do your own research and market conditions can change drastically from week to week. So make sure to update your strategy accordingly.
Note: An earlier version of this article incorrectly stated that BCH had not been available on Coinbase. BCH is currently available for purchase on Coinbase.
Full disclosure: I currently own LTC and have owned the same amount for nearly a year now. It is 12% of my portfolio.