Litecoin Price Falters Amid Doubts Over LTC ETF Approval

by

In January 2024, when the Securities and Exchange Commission (SEC) granted approval for 11 initial spot ETFs, it indicated a positive climate for Bitcoin. This favorable environment led to an increase in Bitcoin’s price due to growing institutional interest. Consequently, it is not unexpected that other prominent cryptocurrency projects are also capitalizing on this trend, with Litecoin (LTC), one of the proof-of-work coins, under consideration.

Nevertheless, it seems that Litecoin isn’t off to a great beginning this year. Its current value is at $94.89, marking a 22% decrease over the past month. The trend in Litecoin’s price this week mirrors other altcoins, which have been seeing some losses since last year’s gains.

In addition, some crypto analysts believe that Litecoin’s decline is due to decreasing chances that a spot LTC Exchange Traded Fund (ETF) will be approved in 2025. As per Polymarket’s data, the likelihood of approving the spot LTC ETF this year dropped to 24% by January 13th.

Odds Of Spot ETFs For Litecoin Continue To Drop

Over several months, experts in the cryptocurrency sector and betting markets have consistently predicted that Spot Litecoin ETFs would be approved. However, on December 19th, Polymarket’s odds suggested a high probability of 75%, which later decreased as the year ended. At the beginning of the year, the chances were nearly 50%, but they started to dwindle, and now they stand at approximately 24%.

Experts have been saying for months that we’d see Spot Litecoin ETFs. Polymarket estimated a 75% chance on December 19th, but as the year ended, those odds dropped. At the start of the year, they were about 50%, but they decreased over time and are now at around 24%.

Meanwhile, certain cryptocurrency experts express confidence that these ETFs could gain approval imminently. Eric Balchunas, an analyst for Bloomberg, voiced his optimism through a recent post. He elaborated that given their nature as a derivative of Bitcoin, it’s likely the SEC will endorse these investment funds.

A Wave Of Crypto ETFs Soon?

As per Balchunas’ statement on Twitter/X post dated December 18th, the market seems prepared for the green light on new spot ETFs for various cryptocurrencies. He suggests that a combined Bitcoin and Ether ETF could potentially be approved soon, and there’s a possibility that Litecoin might follow suit due to its relationship as a fork of Bitcoin, making it potentially easier for proponents to secure approval.

Alongside Litecoin, Balchunas anticipates that HBAR could potentially be the next cryptocurrency to surge, given its non-security status. After that, he suggests Hbar may be followed by XRP or Solana. However, it’s worth noting that XRP has the least chance of approval at this point due to an ongoing legal dispute regarding its classification as a security.

What’s Ahead For Spot Litecoin ETFs

Only Canary Capital submitted an application for a Litecoin Exchange Traded Fund (ETF). If Grayscale decides to transform its Litecoin Trust, with more than $215 million in assets, analysts predict they might do the same.

Experts predict that Litecoin ETFs could face an uncertain future, even if they get SEC approval. There’s doubt among some whether institutional investors will find these investments appealing. The performance of spot ETFs for Bitcoin and Ethereum has been relatively poor as well. For instance, Bitcoin funds are supported by assets worth $107 billion, which equates to only 5.7% of the total market cap of Bitcoin.

Contrarily, Ethereum holds approximately $11.6 billion, making up only 2.96% of the entire crypto market’s capitalization. Given that Litecoin is a relatively smaller cryptocurrency initiative, most financial analysts anticipate limited impact from LTC-focused ETFs.

Read More

2025-01-13 20:10