Although the mainstream media continues to focus on (and bash) the dramatic rise in bitcoin prices, the last 48 to 72 hours have witnessed an even more mercurial ascent. Litecoin, which for the longest period has remained relatively dormant compared to other altcoins, experienced a mind-blowing surge in the digital markets.
From around $55 several weeks ago, litecoin recently popped into the triple-digit territory. From there, it meandered as traders evaluated the situation. One of the first altcoins to enjoy success among early blockchain proponents, Litecoin was initially designed to be the silver to bitcoin’s gold. It performed well in this role, although it eventually became overshadowed by other altcoins, primarily ethereum.
As such, the digital trading community wondered if the markets would “accept” litecoin as a hundred-dollar cryptocurrency. After the inaugural bitcoin futures drama came and went without much fanfare, this dynamic essentially green-lighted not only litecoin and ethereum, but all other altcoins as well.
Suddenly, the blockchain markets were staring at $700 ethereum and $370 litecoin before correcting some of these ludicrous gains. With so much attention centered on bitcoin prices, the trading community instinctively shifted their attention towards altcoins.
However, this shift only explains a small part of why litecoin and ethereum jumped radically higher. Rather than an internal dynamic, it was the “fear of missing out,” or “FOMO,” that catalyzed the altcoins.
By now, the majority of Americans have at least heard about bitcoin, and more often than not, that bitcoin is a terribly speculative investment. But as they witness the cryptocurrency register all-time highs after all-time highs, they begin to regret that they procrastinated on what appears to be a once-in-a-century opportunity.
Unfortunately, at this point, a single bitcoin is out of the reach of most investors. Major altcoins, on the other hand, are comparatively more affordable. To make sure that they don’t miss the boat again, these FOMO traders piled into the blockchain markets, very much mindful of their long-term potential.
It’s not just a hunch that FOMO is responsible for the spectacular ethereum and litecoin rallies. From the beginning of this year to December 11, ethereum trading volume averaged slightly $604 million. One day later, the average volume spiked to nearly $5.2 billion!
Litecoin witnessed gargantuan changes in its trading sentiment. Up to December 11, average volume measured $238.2 million in value. On December 12, that figure jumped to nearly $7 billion, well exceeding ethereum’s single-day trading volume for this year.
That volume didn’t just appear from established cryptocurrency traders. Traditionalists who saw an opportunity jumped on the FOMO bandwagon, aggressively spiking valuations. If a relatively small group of converts could push altcoins to record levels, imagine what could happen when the vast majority of Americans participate in the blockchain!