Litecoin Price Slips Amid Falling Odds of ETF Approval
Litecoin (LTC), one of the cryptocurrency market’s veteran tokens, faced another challenging weekend as its price hovered at $103.03, marking a sharp 30% decline from its 2024 highs. This downturn aligns with broader market trends as most cryptocurrencies have pulled back from their previous gains.
Adding to the uncertainty, the odds of the Securities and Exchange Commission (SEC) approving a spot Litecoin ETF in 2025 have dropped to just 42%, according to Polymarket, down from a high of 60% earlier this year. This reduced confidence is weighing heavily on Litecoin’s price and market sentiment.
Declining Odds for a Spot Litecoin ETF
The decline in LTC’s performance can be largely attributed to falling confidence in the approval of a spot Litecoin ETF. Despite optimism from experts like Eric Balchunas, a senior ETF analyst at Bloomberg, the likelihood of SEC approval has waned.
Balchunas argued in December that Litecoin, being a hard fork of Bitcoin, might have a better chance of approval compared to other altcoins. He predicted a wave of cryptocurrency ETFs in 2025, starting with Bitcoin and Ethereum combo ETFs, followed by Litecoin and others like Hedera (HBAR), XRP, and Solana (SOL).
However, at present, Canary Capital remains the sole company to have filed for a spot Litecoin ETF. Industry giant Grayscale, which manages over $215 million in Litecoin Trust assets, may also seek to convert its trust into a spot ETF, similar to its efforts with Bitcoin and Ethereum.
Institutional Demand: The Missing Puzzle Piece
While a spot Litecoin ETF could provide a boost to the cryptocurrency’s visibility and adoption, its ability to attract institutional investors remains uncertain. Past performance of Bitcoin and Ethereum ETFs paints a mixed picture:
- Bitcoin ETFs account for 5.7% of the cryptocurrency’s total market cap, with over $107 billion in assets.
- Ethereum ETFs, by contrast, hold only $11.6 billion, representing 2.96% of the market cap, signaling weaker institutional demand.
For Litecoin, the challenge is even greater. With a market cap of $7.7 billion, the token’s appeal to institutional investors is likely to lag behind Ethereum and Bitcoin. Furthermore, Litecoin has steadily lost its prominence in the crypto ecosystem, sliding from a top-10 coin a few years ago to 22nd place today.
SEC Odds Favor Solana and XRP ETFs
While the outlook for a Litecoin ETF remains dim, traders on Polymarket are more optimistic about the prospects of Solana (SOL) and Ripple (XRP) ETFs in 2025.
- The SEC’s odds of approving a spot XRP ETF are pegged at 70%.
- For Solana ETFs, the probability is even higher at 73%.
Both XRP and Solana are backed by stronger institutional interest, with market caps of $144 billion and $67 billion, respectively. Their higher standing in the cryptocurrency hierarchy makes them more attractive candidates for ETF launches.
A Bleak Near-Term Outlook for Litecoin
While Litecoin has historically been a respected name in the cryptocurrency market, its current struggles reflect its diminished status. The declining odds of a spot ETF approval only add to the challenges facing LTC, as institutional interest continues to focus on larger and more dynamic cryptocurrencies like Bitcoin, Ethereum, Solana, and XRP.
For now, Litecoin’s fate hinges on broader market sentiment and regulatory developments. While its core technology remains strong, its shrinking market cap and falling interest among institutional investors may limit its growth potential.
Disclaimer: This article is for informational purposes only and does not constitute investment advice.
