The long-term viability of Litecoin (LTC) as an investment has lately come under scrutiny by cryptocurrency specialist Benjamin Cowen. According to Cowen, Litecoin’s performance is underwhelming, especially when measured against Bitcoin (BTC). He notes that since 2013, LTC has lost 95% of its value relative to BTC.
Litecoin’s yearly highs have been $146 in 2019 and $115 in 2023, respectively. This, according to Cowen, is especially troubling considering the enormous sums of money that the Federal Reserve has recently produced. He claims that Litecoin presents “too much risk for very low reward.”
Cowen also digs into Modern Portfolio Theory, demonstrating through Monte Carlo simulations that a portfolio consisting of Bitcoin, Ethereum, and Litecoin with a 0.0% allocation to Litecoin would produce the greatest risk-adjusted returns. This makes a strong argument against the asset’s viability as a long-term investment or as a diversifier of a portfolio.
Cowen’s argument is convincing, particularly for those thinking about a long-term crypto investment plan, but it’s important to note that he concentrates on the LTC/BTC combination. Some could counter that as retail investors are more interested in LTC’s fiat value than its performance versus BTC, the LTC/USD pair may be a more useful statistic for them.
But even taking into account the LTC/USD combination, it is still clear that Litecoin has underperformed. The coin has had difficulty surpassing its prior highs and has often been in a downturn, which is unconvincing.
Furthermore, Cowen’s observation that Litecoin’s sporadic pumps lead to lower highs is important. Long-term investors who could be caught buying at the top during these “pump and dump” cycles could suffer.
