Litecoin is a fork of bitcoin which occurs when miners agree certain rules within the blockchain need to change.
Miners then change the regulations and create a fork of the original cryptocurrency.
Mati Greenspan, senior market analyst for social trading platform eToro said: “Litecoin and bitcoin are particularly correlated because their use cases are very similar.
“Both are classified as money coins, meaning their main purpose is to be used as a store of value and as a means of payment.”
Marouane Garcon, managing director of Amulet, a crypto-to-crypto derivatives platform said: “Litecoin has been regarded to as the silver to Bitcoin.”
When asked why he feels Litecoin has dropped recently he said: “I believe it’s just following bitcoin.”
In December Litecoin was at its all time high of $375.29, however since then it has dropped by 50 percent to $188.09.
Towards the end of December it is believed bitcoin stabilised at $15,940.
It comes as traders in China and South Korea, two of the major cryptocurrency markets, attempt to scale back on digital currency activity.
Litecoin is seen as a faster and more lightweight version of bitcoin because it takes two and a half minutes to complete a transaction where as bitcoin takes 10 minutes.
Charlie Lee, founder of Litecoin has also quadrupled the amount of Litecoin that can be in circulation.
The cryptocurrency can have a total of 84million. Bitcoin can only hold 21million.
Mr Lee’s aim was never to compete with bitcoin but create something that would compliment the leading cryptocurrency.
He said: “The vision is always I wanted Litecoin to complement bitcoin — not compete.
“Bitcoin can be used for like moving millions of dollars between banks, buying houses, buying cars. It’s really secure. Litecoin can be used for cheaper things.”