(
TheGenesisBlock) As bitcoin continues to climb
to record highs, reaching as high as $1,141 on Bitstamp, it is joined in
growth by a number of alternative digital currencies. The most visible
has been litecoin, which has returned to what might be considered a
normal trading range relative to bitcoin.
Litecoin is not alone in its
gains, with others like
Peercoin and Namecoin making similar gains.
The rise of
Litecoin has made
numerous headlines
over the past week, surprising many with its meteoric gains and
crossing of one billion dollars of market capitalization. Yet, the
dynamics in which it is actually traded are often overlooked,
particularly its relationship to bitcoin. On BTC-e, the leading litecoin
exchange by volume, the bitcoin-litecoin currency pair is traded with
as much or more volume as litecoin-dollar. It also regularly dictates
movement as visible through a series of technical factors.
As
we noted in August,
litecoin and bitcoin are beginning to show signs of trading in a manner
similar to gold and silver. In particular, maintenance of a banded
price ratio is a dynamic well known to the precious metals and once
again proving its potential applicability to digital currencies. While
the original research on the matter explains in more detail, those
watching the ratio may well consider the latest litecoin-dollar gains to
be an expected correction. Having fallen out of range amid bitcoin’s
800% climb in the past month, it has since normalized.
Not to be overlooked is
Peercoin (
PPC), an altcoin that utilizes an
alternative mining implementation based not only on bitcoin’s
proof-of-work scheme, but also a proof-of-stake. The proof-of-stake
system distributes new coins based on holdings rather than just finding
correct hashes. While PPC / BTC remains the dominant currency pair for
the altcoin so far, PPC / USD was recently added on BTC-e, leading to a
massive jump in its exchange rate.
Open your free digital wallet here to store your cryptocurrencies in a safe place.
