October 3, 2022

Litecoin is gradually recovering from the big discount it received in the last few months. It may take some time for the market to recover to previous highs.

Holders can still earn some passive income while they wait for the recovery. But is this really a sound choice in light of recent market events in May?

The Terra UST crash was the biggest eye opener to the risks that can be associated with the bet. DeFi staking and lending platforms have been tested by the most recent bear market and some cracks have been exposed.

This is why there were mixed reactions when it was revealed that Binance has included LTC in its DeFi staking facility.

One of the respondents noted that the move would facilitate short LTC. This means that LTC’s price action will likely end up subdued.

Some believe that the low API offered in the installation may not be enough incentive to convince people to take the risk. Especially considering the risks associated with having crypto on centralized exchanges.

How will the move affect Litecoin?

Such low returns will have significant returns only for investors who bet large amounts of crypto.

However, low yield may also be unattractive to whales. However, if the staking team receives a healthy amount of capital, then this can have an impact on demand. Short opportunities can also lead to more volatility for the cryptocurrency.

The announcement comes at a time when demand for Litecoin has increased. Both total addresses and new addresses holding LTC have increased over the past three weeks.

Source: Glassnode

Despite this uptick, LTC’s gauge of inertia has shown significant activity over the past three to four weeks.

The gauge had its biggest gain since the mid-month rally in July.

It also had another spike in activity at the end of July, following another major rise in prices.

The price has since declined, and this is consistent with outflows or profit taking.

Source: Glassnode

The charts highlight the increased demand for Litecoin, which may be an indication that it is flowing out of the exchanges.

Binance’s move may be aimed at encouraging LTC holders to keep their coins on the exchange. However, the low staking return may not be attractive, especially for the normal Litecoin investor, but this may be a different case for whales with large balances.

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