Litecoin (LTC) could soon join the ranks of Bitcoin and Ethereum as a cryptocurrency with its own exchange-traded fund (ETF). If approved by the U.S. Securities and Exchange Commission (SEC), this new Litecoin ETF could potentially attract up to $580 million in inflows, based on the growth patterns of Bitcoin ETFs, which currently hold about 6% of Bitcoin’s total supply.
Canary Capital, a digital asset investment firm, is leading the way for Litecoin’s ETF. The company filed for the fund in October, and recently, Nasdaq filed a 19b-4 form with the SEC, triggering a review process for the ETF. This submission marks a significant step in the journey toward making Litecoin the next cryptocurrency to be included in regulated U.S. investment products.
Litecoin’s technical similarities to Bitcoin, including its Proof of Work consensus mechanism, position it as a strong candidate for SEC approval. Analysts suggest that because of these similarities, Litecoin may be regarded as a commodity, which increases its chances of approval. If the ETF is approved, it could provide investors with an easier route to gain exposure to the asset.
Although some experts predict that Litecoin’s ETF won’t see the same explosive growth as Bitcoin or Ethereum ETFs, there is still considerable optimism about its potential. The key to Litecoin’s success lies in investor demand, and while it may not achieve the same level of attention as Bitcoin, it still has the potential to capture a meaningful market share.
The success of Bitcoin ETFs, including BlackRock’s iShares Bitcoin Fund (IBIT), has paved the way for other cryptocurrencies to be considered for similar products. Bitcoin ETFs have accumulated vast amounts of capital, surprising the market and exceeding expectations. Litecoin could follow a similar trajectory if it garners approval.
Bitcoin ETFs currently hold around 6% of Bitcoin’s market capitalization, while Ethereum ETFs account for about 3% of Ethereum’s market cap. These figures have set a precedent for estimating the potential inflows for Litecoin. The proposed Litecoin ETF could attract between $290 million and $580 million in its first year, a significant amount that would place Litecoin among the leading cryptocurrencies in the ETF space.
While the projected inflows for Litecoin may not rival Bitcoin or Ethereum ETFs, they represent a solid foundation for the token to grow in the mainstream investment market. With Litecoin’s market capitalization standing at $9.6 billion, the ETF could boost its visibility and give it a larger share of institutional and retail investments.
