Charlie Lee Litecoin founder warns of risks of buying litecoin

Recently the price of litecoin a smaller competitor of bitcoin, and in many ways similar, shared in the meteoric rise of its big brother. Its price more than doubled from Sunday Dec. 10 to over $300 on Tuesday morning.

Litecoin(LTC) is now the fourth largest crypto coin by market cap.

Litecoin creator Charlie Lee sounds warning for litecoin buyers

Many litecoin enthusiasts were busy celebrating the rise in their holdings. However, Charlie Lee a former director of engineering at the well-known crypto-exchange Coinbase sounded a clear warning last Monday night.

Lee wrote: "Sorry to spoil the party, but I need to reign in the excitement a bit…,Buying LTC is extremely risky. I expect us to have a multi-year bear market like the one we just had where LTC dropped 90% in value ($48 to $4). So if you can't handle LTC dropping to $20, don't buy!"

Joe Clayton who heads the Securities and Exchange Commission (SEC) also had words of warning: "The world's social media platforms and financial markets are abuzz about cryptocurrencies and initial coin offerings. There are tales of fortunes made and dreamed to be made. Investors should understand that to date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies. If any person today tells you otherwise, be especially wary."

Causes of litecoin's rise

Many think that bitcoin price growth is positively impacted by the start of futures trading on the Chicago Board of Exchange (CBOE) and the prospect of more futures trading by the Chicago Mercantile Exchange(CME) later this month.

The increased trading activity in bitcoin has trickled down into other cryptocurrencies such as litecoin.

The increased activity in bitcoin trading is not only driving up transaction fees but clogging the network. Litecoin has faster speeds than bitcoin transactions and lower transaction costs making it more attractive.

Coinbase, the popular cryptocurrency exchange is adding an astonishing 100,000 new users a day and as noted in a recent Digital Journal article was for a time the number one app on the Apple App Store.

Coinbase is only dealing with bitcoin and litecoin as well as the second largest coin etherium (ether).

Some buyers are beginning to realize that litecoin has advantages over bitcoin in terms of speedier transactions and lower fees as well as having many more coins available. As a result its price is not yet that high.

Even though the prices of both bitcoin and litecoin have created what many consider an unsustainable bubble, many inexperienced buyers may be entering the market so that they do not miss out on the tremendous games that many who entered the market earlier have gained.

Finally the creator of litecoin Charlie Lee has often been appearing on media so that litecoin has a stronger presence in the public mind. Lee is hardly a charismatic figure but a low key straight-sounding chap but this may actually be a plus as he does not sound like an insincere huckster. Lee has been on CNBC and Glenn Beck as shown on the appended videos.

With the huge increase in prices news media have begun to cover the news about Litecoin and this too no doubt creates more buying interest.

Can the upward trend last?

Even Charlie Lee warns that the present trend is ultimately unsustainable. Lee notes that there could be a multi-year bear market with the litecoin price dropping as low as $20.

At the very least there is likely to be a correction of considerable magnitude, no doubt thousands of dollars in the case of bitcoin.

However, others point out that new players are coming in all the time and that the market is nowhere near saturation but is constantly growing. In the case of bitcoin the number of coins is quite limited so any new demand will push the price up even further. Litecoin has more coins so the movement may not be as large.

For the present the market is likely to show more volatility with large swings rather than simply a burst of the bubble with prices continuing down and down.

Previously published in Digital Journal

Bitcoin competitor litecoin reaches new high December 11th

(December 11) Not only bitcoin has been soaring to new heights lately but Litecoin a competitive coin released by Charlie Lee on October 13th 2013 based on the bitcoin core but having several differences.

Litecoin's new high

During today's trading the price of the currency rose as high as $186.89 according to CoinMarketCap.

While this may seem minuscule compared to bitcoin's sprint up to $17,000 plus, Litecoin started 2017 at a mere $4.33. At that price anyone could buy a few. Your return up to now would be about 4,215 percent, quite a bit better than bank interest! It also even compares well with the gain on bitcoin which is somewhat more than 1,600 percent. Some exchanges put the recent high at $18,300 with a gain of 1,800 percent for the year but that is still lower than the litecoin gain.

The evidence seems clear that Litecoin's gain so far this year is over twice that of bitcoin even though all the press and chatter is about bitcoin.

Litecoin often rises and falls in close concert with bitcoin

Some even suggest that litecoin is cruising in bitcoin's wake or riding bitcoin's coattails.

A recent CoinDesk article claimed that bitcoin and litecoin were "birds of a feather".

While the aforementioned explanations may provide a better sense of why both Bitcoin and Litecoin have pushed higher this year, certain analysts have started offering different points of view.

Some of them have asserted that Litecoin is a "Bitcoin hedge," as the latter currency's network is dealing with a high level of unconfirmed transactions.

Litecoin as a bitcoin hedge

Mati Greenspan, senior market analyst for eToro, was in this camp.

"Litecoin is more scalable by nature and with bitcoins mempool currently flooded with unconfirmed transactions Litecoin is looking much better than BTC as a medium of exchange," he said.

Charles Hayter, co-founder and CEO of digital currency platform CryptoCompare, also agreed that Litecoin is a Bitcoin hedge, stating that while the two are very similar, the altcoin has greater upside potential and less downside risk.

Bitcoin Alternative

Other market observers took a different tack, describing Litecoin as an investment that has been receiving tailwinds as market participants flock to cryptocurrencies.

Jeff Koyen, strategic advisor for 360 Blockchain, stated:

"All the attention paid to bitcoin in the past few weeks has served as a rising tide for all cryptocurrencies," he said.

"But with bitcoin overbought at the moment and Ethereum relatively flat, they're turning to Litecoin -- a grande dame crypto with reliable underpinnings and enough similarities to bitcoin that they're comfortable buying."

Yazan Barghuthi, project lead at Jibrel Network, also weighed in on the situation:

"We're going to see a lot of value flow into alt-coins driven by portfolio diversification and realization of gains," he stated. In a speculative market, with new non-savvy entrants, the alt-coins that will do the best are the ones with highest accessibility. With LTC being provided across the main exchanges - i.e. is highly accessible to the average investor, it is no surprise to see a large chunk of the Bitcoin to Altcoin flow towards LTC."

Previously published in Digital Journal