Here's Why Bitcoin and Litecoin Are Rising but Other Cryptocurrencies Are Falling

Presidents Day weekend was a mild one for most of the cryptocurrency market, but bitcoin was a big exception. The leading digital currency rose by more than $1,000 over the three-day period while most other cryptocurrencies were relatively flat. On Tuesday, it's more of the same, except there are two key exceptions -- bitcoin and Litecoin.

Here's a look at the latest prices of the largest cryptocurrencies and what could be fueling the rally in bitcoin and Litecoin.

Image source: Getty Images.

Today's cryptocurrency prices

Here's a look at the five largest cryptocurrencies by market capitalization and how much each has changed over the past 24 hours, as well as over the long Presidents Day weekend.

Data source: www.investing.com. Prices and daily changes as of Feb. 20, 2018 at 1:30 p.m. EST, and prices are rounded to the nearest cent where appropriate.

What's fueling bitcoin's comeback?

There isn't any major news fueling bitcoin's recent price action, although there are some positive catalysts. In general, it seems that after an approximately month-long period of negative headlines and investor pessimism, the bad news is over (for now, at least) and confidence is coming back into the largest cryptocurrency.

One potential catalyst fueling the recent gains is that bitcoin is starting to look a little more practical as a currency. In particular, the spiking transaction fees that had recently begun scaring merchants away from accepting bitcoin have dropped dramatically. For example, payment processor Stripe stopped accepting bitcoin payments for customers, specifically citing high fees as a reason for the move.

In mid-December, bitcoin transaction fees peaked at $34. Obviously, it's silly to pay for, say, a $100 purchase with a method that involves a cost like this. However, the average transaction fee on the network has steadily declined since then, and fell to less than $1 over the holiday weekend. As of Monday, Feb. 19, the average fee is less than $0.79, according to bitinfocharts.com.

While this is still a significant jump from the pennies paid for bitcoin transactions for most of the cryptocurrency's history, it's a more palatable fee for both consumers and merchants.

Why have fees fallen? For one thing, the speculative rush into bitcoin has cooled off. Sure, the cryptocurrency still has a five-figure price tag, but we're not seeing the parabolic price movement of late 2017 anymore. Without getting too technical, fewer bitcoins being moved around translates into lower fees. In addition, consumers and companies seem to be using the network more efficiently -- such as by combining several transactions into one.

LitePay optimism and post-fork rally continues

Litecoin was a top performer last week as well, for two key reasons. First, the unofficial "hard fork" that created Litecoin Cash and distributed the coins to Litecoin holders at a 10-for-1 rate was completed over the weekend. While it remains to be seen how effective the new Litecoin Cash currency will be (if at all), it seems to have helped renew interest in Litecoin.

As I write this, Litecoin Cash is trading for $8.66, so holders of Litecoin at the time of the fork are entitled to nearly $87 worth of the currency for every Litecoin they held. (Note: In full disclosure, I own Litecoin tokens and have not claimed my Litecoin Cash, nor do I have any immediate plans to. The process is quite complicated and Litecoin Cash isn't usable on most major crypto exchanges at this time.)

The other catalyst is the recently announced LitePay platform that will allow for easy Litecoin payments at any merchant that accepts Visa cards. The platform is set to be unveiled on Feb. 28, and given the recent action in Litecoin, investors appear to be excited about the prospect that Litecoin could possibly become a more widely used currency.