Litecoin (LTC) Gears Up for Breakout Rally as ETF Hopes and Bullish Momentum Align

The U.S. Securities and Exchange Commission (SEC) is set to decide on the Canary Litecoin ETF, as Litecoin (LTC) shows bullish momentum, with daily trading volumes jumping 31% to over $338 million.

While the SEC has already issued early delays for multiple cryptocurrency-related exchange-traded funds (ETF) filings, notably those involving Ethereum and other digital assets, the Litecoin ETF has so far escaped such early commentary.

Bloomberg ETF analyst James Seyffart highlighted the unique status of the filing in a recent post on X (formerly Twitter).

“The @CanaryFunds Litecoin ETF filing is due for a decision (possibility a delay) by Monday 5/5. SEC went early & delayed a bunch of filings, but not this one. Only asset they'll likely approve this early is a Litecoin ETF. A delay is more likely, but something to keep an eye on,” he wrote.

What happened: The SEC postponed the approval of several altcoin ETFs on March 11. Among them were Grayscale’s filings for Dogecoin, Litecoin, XRP, and Cardano.

The commission also delayed its decision on XRP and Solana ETFs from Canary Capital and 21 shares. Not to mention Canary’s filing for its Litecoin ETF.

The regulator also put off its decision on in-kind creation and redemptions for BlackRock’s IBIT and Fidelity’s FBTC and FETH. Moreover, 21 shares also saw a delay in the proposal to include staking in its Ethereum (ETH) ETF.

However, despite the SEC delays, James Seyffart said he believed all of these ETFs had high chances of approval. He pointed out that further delays were to be expected, a standard practice by the commission.

Additionally, Paul Atkins had yet to be confirmed as the agency’s new chairman at the time, which might have contributed to the delays.

In February, Seyffart and Eric Balchunas, senior ETF analyst at Bloomberg, predicted Litecoin had a 90% chance for approval this year; Dogecoin, 75%; Solana (SOL), 70%; and XRP, 65%. They said that Trump’s re-election increases the likelihood for all of these ETFs to get approved in 2025. Their predictions were based on an analysis of the SEC’s actions over the past few years.

After Trump took office in 2017, the SEC approved the first and only cryptocurrency ETF, which tracks futures contracts on bitcoin.

Earlier in 2023, the SEC instituted a new reporting requirement for ETFs engaging in futures trading.

Later, in December 2022, the SEC instituted a new reporting requirement for ETFs that invest in cryptocurrencies.

The agency also issued a series of guidance documents on topics such as digital assets, cybersecurity, and climate risk.

These actions suggest that the SEC is actively engaged in thinking about how to best regulate the cryptocurrency market.

According to Balchunas, the SEC is more likely to approve an ETF that is fully compliant with the agency’s regulations and that is invested in a cryptocurrency that is widely traded and liquid.

The agency is also more likely to approve an ETF from a well-known and respected ETF provider, such as BlackRock or Vanguard.

In the case of the Canary Litecoin ETF, the filing is for a physically backed ETF, meaning that the ETF will hold the underlying Litecoin in its portfolio. This is in contrast to a futures-based ETF, which would trade futures contracts on Litecoin.

Futures-based ETFs have been approved by the SEC, but they are subject to early withdrawal, which allows the SEC to delay its decision on an ETF filing for up to 15 days.

However, the SEC is not able to early withdraw its decision on a physically backed ETF. This means that the agency must make a decision on the Canary Litecoin ETF by May 5.

If the SEC does not approve the ETF by that date, it will be automatically approved.

The approval of the Litecoin ETF would be a huge step in developing such crypto investment offerings, particularly for altcoins. It would add to the precedent of Bitcoin (BTC) and Ethereum (ETH), whose spot ETF markets are already established.

However, most analysts remain cautious. The SEC has historically preferred to delay decisions as long as legally permissible, citing the need for more market surveillance agreements and robust investor protection.

In the May 5 X post, Seyffart asserted that the commission could decide today on Canary’s Litecoin ETF.

His post invited multiple commentaries; some seemed to dismiss his projections, while others remained hopeful, agreeing that the Litecoin ETF could soon receive approval.

However, one X user with the pseudonym Panda was not very excited about the news, claiming there’s no use for a Litecoin ETF, especially since it still has a lower market cap than other cryptocurrencies. He argued that he would be more excited if the asset was worth more