Canary Capital Poised to Launch Litecoin ETF with Potential for $580 Million in Inflows
As the prospect of a Litecoin (LTC) exchange-traded fund (ETF) continues to gain attention, demand for the product could reach up to $580 million, assuming Wall Street adopts it at a rate similar to bitcoin (BTC)’s market uptake.
This projection is based on the approximately 6% of bitcoin’s total supply now locked in various bitcoin ETFs. If LTC were to achieve similar performance, it could result in over $500 million in inflows. Litecoin’s Proof of Work consensus mechanism, similar to Bitcoin’s, could bolster its chances of success.
The potential for LTC to become the third cryptocurrency after Bitcoin (BTC) and Ethereum (ETH) to receive its own ETF in the U.S. has gathered momentum. Canary Capital, a digital asset investment firm founded by Steven McClurg (former co-founder of Valkyrie Funds), is currently the frontrunner to issue the Litecoin ETF.
Canary Capital began laying the groundwork for the Litecoin ETF in October, and on Thursday, Nasdaq filed a 19b-4 document with the U.S. Securities and Exchange Commission (SEC), officially beginning the countdown for the SEC’s decision.
James Seyffart, an ETF analyst at Bloomberg Intelligence, and Eric Balchunas from Bloomberg have expressed optimism, noting that Litecoin’s technical similarities to Bitcoin—especially its use of a Proof of Work consensus mechanism—may help it gain SEC approval, positioning it as a commodity.
The real question is whether investor demand will be sufficient for a Litecoin fund to thrive. Despite the prospect of relatively lower demand compared to Bitcoin or Ethereum ETFs, Seyffart believes that Litecoin could still succeed: “Even if demand is comparatively low, it could still see some success. The market and investors will make that determination.”
Bitcoin ETFs, particularly the BlackRock iShares Bitcoin Fund (IBIT), have set unprecedented records since their launch, with Bitcoin ETFs raising massive amounts in their first year, while Ethereum’s ETFs have followed suit with strong performance.
JPMorgan’s analyst Kenneth B. Worthington believes that beyond Bitcoin, Ethereum, or Solana, other tokens such as Litecoin often lack the depth for long-term success. He explained, “They may capture incremental attention for a limited time, but their sustainability remains uncertain.”
However, using the “adoption rate” of Bitcoin ETFs as a benchmark, Worthington forecasts that the Litecoin ETF could attract between $290 million to $580 million in its first year, depending on investor interest. Although this figure is smaller than the $108 billion raised by Bitcoin spot ETFs, it is still a notable sum, especially since only about 1,330 out of 4,000 ETFs in the U.S. have assets under management (AUM) greater than $300 million.
In conclusion, while Litecoin’s ETF might not match the massive success of Bitcoin or Ethereum ETFs, it represents a solid opportunity in the growing cryptocurrency fund space.
