The creator of Litecoin (LTC), Charlie Lee, has warned investors of a potential bubble when the upcoming halving event occurs. He further warned investors seeking crypto exposure that it is still incredibly young and the volatility is an innate feature of the asset class, as reported by Micky, July 10, 2019.
A Stroke of Reality
Charlie Lee of Litecoin has taken a refreshing stance relative to most project founders and told investors to stay rational amidst growing FOMO. The last time around, Litecoin surged to $375, followed by a massive dump to $30 in late 2018.
Lee expects a considerable amount of FOMO as a result of the upcoming halving but doesn’t feel it’s justified considering market dynamics.
As a rule of thumb, investors must always consider the market prices in events that are certain to happen. Markets, in general, tend to trade one year forward to current expectations.
Factoring in these assumptions, it should be clear that the halving is already priced in from a rational investors perspective. However, the lack of maturity and growing euphoria make it almost impossible for investors to keep a level head.
Touching upon the halving, Lee believes it will shock the system. The incoming supply to the market will nearly half, causing the equilibrium zone of demand and supply to fall further down, increasing scarcity and the potential for a price boom.
Charlie Lee drew a lot of flak for selling all of his Litecoin at the previous ATH. It is rare for a project founder to make such a move, but he claims his holdings constrained his decision making.
Many are already talking about how bullish BTC looks as commentators predict a massive wave of FOMO. While altcoins have failed to take off, maximalists have weighed in by saying 2017 was a one-off moment.
To summarize this, warnings like this shouldn’t be taken lightly because this appears to be just the start of the bull cycle. As the boom progresses, it will become increasingly challenging to control investment impulses.