While it is may be called the silver to bitcoin's gold, Litecoin may not move in lockstep with the original cryptocurrency as far as a price rally is concerned.

Two new voices have emerged to dampen enthusiasm for Litecoin's surging prices. (See also: Litecoin's Phenomenal Year).

Billionaire Mike Novogratz, who has invested approximately 10% of his fortune in cryptocurrencies, said the Litecoin rally will not have "the same legs" as bitcoin. "I would sell it here versus buying bitcoin," he told CNBC, adding that the market was "in phase one of a speculative mania (in cryptocurrencies)". Litecoin's current rally is less than a week old.     

Another unlikely source to lessen demand for Litecoin is Charlie Lee, the cryptocurrency’s creator.

As the cryptocurrency surged to new highs this morning, Lee tweeted to “reign in the excitement” over its skyrocketing valuations. Lee urged investors to not buy his creation if they couldn’t handle its value dropping to $20. 

Based on a cursory examination of Litecoin prices, his tweet didn’t have the intended effect. Litecoin shot up by 90% overnight to $346 this morning. At 22:56 UTC, the cryptocurrency was trading at $319.38, an increase of 53% in the last 24 hours. On an overall basis, Litecoin’s valuation is up by approximately 2735%, as of this writing. This compares with an increase of more than 1400% for bitcoin.

Long on Litecoin

Despite his warning about Litecoin’s volatility, Lee is long on its utility. In a CNBC interview, he said the cryptocurrency was four times faster and had 2.5 times the transaction speeds of bitcoin. This is partly due to his early support for SegWit, an August hard fork that increased block size for bitcoin and created Bitcoin Cash from its blockchain. By then, Litecoin had already a head start in scaling its network for transactions because it had implemented SegWit in April. According to Lee, Litecoin’s value is closely linked to its underlying technology that multiplies use cases and markets for the cryptocurrency. (See also: Is Litecoin The Future Of Cryptocurrency?)

Litecoin also has seen a spike in transaction volumes recently. But it is not clear whether that spike is related to speculation from traders or from increased use of the cryptocurrency. Other crytocurrencies, such as Dash, have also emerged to compete with Litecoin.

In yesterday’s interview, Lee said only “a handful” of cryptocurrencies will have value in the future. This is because cryptocurrencies are dependent on network effects and will need scalable networks in the future. “It will take many years before this vision of mine happens,” he said in a Youtube interview.

 

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