Bitcoin haters, which include a great number of my InvestorPlace colleagues, may want to sit down for this. The top-ranked cryptocurrency is all the rage as it stands poised to take out the $20,000 level. However, to “blockchain market” participants, litecoin prices have been the real story.
No other major cryptocurrency comes close to what some might term “the poor man’s bitcoin.” Over the trailing week, litecoin prices have jumped over 220%. In the trailing month, lucky investors have seen nearly 420% profits. And during the trailing year — and yes, this is where you’ll want to sit down — litecoin jumped 8,165%.
To put that into perspective, a modest $1,000 investment could have netted you over $80,000. To put it into further perspective, the equivalent capital towards bitcoin would have granted you “only” a little over $19,000.
This should be welcome news for litecoin creator Charlie Lee. Originally developed as a leaner, meaner version of bitcoin, its technical distinction didn’t merit much attention during the blockchain’s infancy. After all, why bother with an alternative cryptocurrency when the general public didn’t even know what the term meant? Litecoin prices soaring to where number-two ranked ethereum once stood last month attests to its progress.
But as litecoin hit ridiculous levels, Charlie Lee tweeted his concerns that “Buying LTC is extremely risky.” Furthermore, he expects litecoin prices to enter a multiyear bear market. Potentially, the cryptocurrency could drop a whopping 90%!
With such comforting endorsements, who needs haters? In all seriousness, we should take these words with a heavy grain of salt. And by salt, I mean the real thing, not the cryptocurrency.
Don’t Deify Charlie Lee
I’m not trying to knock Charlie Lee or his concerns. Rather, I’m saying that you have to distinguish the asset from the man. For instance, we still don’t know who the real Satoshi Nakamoto — the alleged Bitcoin creater — is. Some claim that Nakamoto has been identified, but for all I know, we just hounded some random old Japanese guy.
The greater point, though, is this: did “bitcoiners” gain anything from the Nakamoto drama? Did his alleged bullishness or bearishness impact the markets? No. Bitcoin will be priced at whatever people are willing to pay for it.
In other words, Charlie Lee’s opinions are just as valid as your own.
Here Come the FOMO Traders!
The biggest reason why litecoin prices jumped the way that they did is due to FOMO traders. These individuals likely learned about the cryptocurrency opportunity recently, but stayed on the sidelines while bitcoin skyrocketed to five digits. Feeling the pressure from the “fear of missing out,” they jumped into the most affordable and credible alternatives.
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That massive amount of money is coming from somewhere outside the established cryptocurrency community, and I “blame” the FOMO traders.
Another great indicator is that litecoin is currently one of three cryptocurrencies offered on Coinbase. As I explained in another InvestorPlace article, Coinbase is the consumer-friendly crypto service. Thus, they opened the door for educated FOMO traders to start buying litecoin before it too becomes unattainable.
Litecoin Prices Are Here to Stay!
Our own Lawrence Meyers believes that the bitcoin and cryptocurrency rallies will end badly. Not surprisingly, I’m on the opposite side of the fence. In my view, the dramatic rise in litecoin prices is only the beginning.
Here’s why: during the blockchain’s infancy stage, very few people even knew of the existence of the blockchain and cryptocurrencies. Today, people like the FOMO traders are beginning to realize the time-accelerated platform of the digital-currency markets. When the general public gets wind of this information, it’s game over for the traditional stock markets.
Three weeks ago, I encouraged my business colleague to take the $100 challenge. He accepted and bought $100 worth of litecoin. He then made another purchase for a “Bennie,” splitting between ethereum and litecoin. His account soon expanded to over $700. He cashed out his initial investment, and now, he gets to play with over $600 of “house money.”
Oh yeah, he cashed out his position at 4pm Pacific standard time. In New York City, the time was 7pm, and the markets were closed.
No other investment category offers the convenience, accessibility and massive profitability potential of cryptocurrencies. Furthermore, with cryptos, you typically invest a small amount and get big returns. In the stock market, you invest a big amount and get small returns.
Remember too that outsized performance in the traditional markets usually takes time. Consider that one of our best-performing analysts, Will Ashworth, picks the right stock 69% of the time. He also has an average return of 11.3%. On Wall Street, he’s a superstar. In the crypto markets, it’s an hour’s work.
This profound paradigm shift is simply too awe-striking for most people to ignore!
As of this writing, Josh Enomoto is long bitcoin, ethereum and litecoin.
