Litecoin ETF: a new round of popularity or a marketing move?
According to the analytics platform CoinGecko, Litecoin (LTC) was among the top 15 cryptocurrencies by market capitalization at the beginning of 2025. However, its institutional acceptance remains low. Is the launch of ETFs a natural step or a marketing move to draw attention to LTC?
What is an ETF, and why is it essential for Litecoin?
Exchange-Traded Funds (ETFs) allow investors to buy shares tied to an asset's value, bypassing complex storage and security procedures. In the case of cryptocurrencies, traditional investors can access LTC without having to manage private keys and conduct transactions on cryptocurrency exchanges.
According to Bloomberg, trading volumes on traditional stock exchanges have increased by 40% since the Bitcoin ETF was approved in January 2024, demonstrating strong demand from institutional investors. For Litecoin, such a scenario could lead to increased liquidity and an increase in the asset's value.
Litecoin, one of the oldest digital assets, was initially created as "digital silver," similar to Bitcoin ("digital gold"). Fast transactions and lower fees characterize it. The average transaction fee on the Litecoin network in 2024 was just $0.02, making it one of the most affordable digital assets for payments. However, its institutional recognition is still limited, and launching an ETF could make a big difference.
Prospects for Litecoin ETF approval
1. Bitcoin-ETF precedent
One of the main factors contributing to the possible approval of Litecoin ETFs is the successful introduction of spot bitcoin funds such as those from BlackRock, Fidelity, and Grayscale. In the first month after launch, spot Bitcoin-ETFs attracted more than $5.1 billion in investments, one of the most successful launches in the history of financial markets. This showed that US regulators are willing to work with cryptocurrency assets, and institutional investors are highly interested in them.
2. Litecoin's status as a safe-haven asset
Litecoin is not a stablecoin and does not fall under the SEC securities category. This makes LTC a suitable candidate for ETF endorsement as it has high liquidity (average daily trading volume in early 2025 was around $500 million) and proven reliability.
3. Endorsements from large investment firms
Several significant investment funds, including Grayscale, consider converting existing Litecoin trusts into fully-fledged ETFs. The 2024 Grayscale Litecoin Trust (LTCN) trades at more than a 35% discount to the actual asset value, underscoring the market's interest in a more liquid instrument. If such funds receive SEC approval, it will create a favorable environment for institutional investors who previously avoided LTC due to custody complexities.
4. Risks and potential obstacles
Despite positive trends, the SEC may refrain from approving a spot ETF for Litecoin due to its smaller market capitalization than Bitcoin and Ethereum.
Impact on Litecoin (LTC) exchange rate
Launching a spot ETF could potentially lead to a significant increase in the price of LTC, as it did with Bitcoin.
The emergence of an ETF will attract institutional investors, increasing liquidity and demand for LTC. JPMorgan analysts predict a possible 40-50% growth of LTC quotes in the first weeks after the ETF launch.
Traders may build approval into the price in advance, leading to volatility. In the case of the Bitcoin-ETF, the cost of BTC rose 15% in anticipation of approval and 25% after launch.
If the Litecoin-ETF receives significant investment, LTC will strengthen as an investment asset. In the case of bitcoin, ETFs raised more than $10 billion in the first three months, and if the LTC ETF receives even 10% of that volume, its price could reach $150.
If Litecoin becomes the third cryptocurrency after bitcoin and ether available through ETFs, it will strengthen its position in the crypto economy.
Conclusion
Launching a Litecoin spot ETF has real prospects, but so far, there have been no clear signals from the SEC to consider such applications. This could mean that talk of a Litecoin ETF is still more speculative. However, if the process is launched, LTC could repeat the success of Bitcoin, gaining a new wave of popularity among investors.
