Charlie Lee, the creator of Litecoin, thinks prospective crypto investors should prep themselves for risk.
In an interview on Crypto Love, Lee discusses the warnings he gave to investors in late 2017 when Litecoin’s value was skyrocketing.
“Crypto’s really risky. I’ve seen many bear markets or crashes that are 90% down. So, at that time when it was $200, I said it can drop to $20 and don’t be surprised if it does, and what happens is when the price does crash, it shakes off all the weak hands. Everyone who bought in at $200 or higher will sell at $20, and they’re losing 90% of their portfolio. So, my point was that if you can’t withstand a 90% drop, then don’t buy in, because it’s too risky for you.”
Litecoin did almost drop to $20 by December 2018, though it is now trading around $123. Lee says he thinks Litecoin hopefully “bottomed out” already.
He also discusses the likely impact of the upcoming Litecoin halving, which is less than a month away.
“The halvening is always kind of a shock to the system. When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For Litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine.”
“In terms of the price, the halvening should be priced in because everyone knows about it since the beginning. But the thing is people kind of expect the price to go up. So a lot of people are buying in because they expect the price to go up and that’s kind of a self-fulfilling prophecy. So, because they’re buying in, the price does actually go up.”