Litecoin’s 51% Surge: Is It the Next Big ETF Bet?

Litecoin (LTC) has defied the broader crypto market downturn, soaring 51% in February to reach $135. While major cryptocurrencies like Bitcoin, Ethereum, Solana, and Dogecoin have stagnated or seen minor gains, Litecoin’s performance stands out. What’s fueling this rally? The growing anticipation of a spot Litecoin exchange-traded fund (ETF) may hold the answer.

The ETF Race: Litecoin Takes the Lead

Originally forked from Bitcoin’s source code in 2011, Litecoin has often been seen as a reliable alternative to BTC. Now, it’s gaining traction as one of the most likely altcoins to secure ETF approval. Bloomberg Intelligence analyst Eric Balchunas described the situation using a baseball analogy: “All of them are rounding the first base, except for Litecoin, which is headed to third.”

Balchunas and fellow analyst James Seyffart have given Litecoin a 90% chance of ETF approval. Meanwhile, prediction markets on Polymarket peg the odds at 85%, slightly down from 87% last week.

SEC Signals and Regulatory Momentum

In the past two weeks, the SEC has acknowledged a wave of altcoin ETF filings, including those for Litecoin. This is a notable shift from previous instances where the agency quickly rejected or asked issuers to withdraw their applications. While acknowledgment doesn’t guarantee approval, it signals a more open stance towards altcoin ETFs.

Further strengthening Litecoin’s case is Canary Capital’s recent success. The firm’s spot Litecoin ETF application has now been listed on the Depository Trust and Clearing Corporation (DTCC) website. Historically, Bitcoin and Ethereum ETFs appeared on DTCC’s active and pre-launch ETF list just before their respective SEC approvals. Although a DTCC listing isn’t a definitive green light, it’s a key step in preparing for potential regulatory approval.

Why Litecoin? The Commodity Classification Advantage

One of Litecoin’s biggest advantages is its regulatory status. The Commodity Futures Trading Commission (CFTC) previously classified Litecoin as a commodity in its enforcement action against Kraken last March. Unlike many other altcoins that may be deemed securities by the SEC, Litecoin’s similarities to Bitcoin give it a clearer regulatory pathway.

BitGalactic’s Take: A Catalyst for the Next Crypto Cycle?

BitGalactic analysts view Litecoin’s ETF momentum as a potential catalyst for the next bullish wave in the crypto market. With institutional interest growing and regulatory hurdles being cleared, Litecoin could pave the way for a broader altcoin ETF adoption. However, investors should remain cautious—regulatory dynamics are unpredictable, and SEC approval is never a guarantee.

Could Litecoin be the dark horse of the 2024 crypto ETF race? If history is any indication, the market may be underestimating its potential.