Is there more to crypto ETFs than BTC and ETH?
Following approvals of spot Bitcoin and Ethereum exchange-traded funds (ETF) in the US last year, expectation is growing that the Securities and Exchange Commission (SEC) will say yes to more. Payment-focused Litecoin (LTC) is seen as the next likely candidate
The Ledger looks at the spot Litecoin ETF rumors and analyzes how cryptocurrency prices have reacted to spot ETF listings.
The quick take:
Analysts say Litecoin is the top contender for a new category of spot crypto ETF in 2025.
The SEC’s main concern is fraud detection and market surveillance.
Nasdaq applied to list the Canary Litecoin ETF in January 2025.
Bitcoin soared after its ETF approval, but Ethereum’s ETF struggled.
The SEC has up to 90 days to decide on Litecoin’s ETF application.
A spot Litecoin ETF in 2025? Anti-fraud and manipulation measures will be decisive
When the Nasdaq Stock Exchange applied to list and trade shares of the Canary Litecoin ETF in January, the exchange disclosed that it had a surveillance-sharing agreement with Coinbase Derivatives through its membership in the Intermarket Surveillance Group (ISG).
The presence of a system to detect and prevent fraud and manipulation of spot crypto ETFs is a key criterion placed by the US Securities and Exchange Commission (SEC) when approving such ETF listings.
For spot Bitcoin and Ether ETFs, the SEC has concluded that fraud or manipulation in spot crypto markets could be detected by examining the “consistently high” correlation between futures markets on the Chicago Mercantile Exchange (CME) and spot prices.
It remains to be seen whether the SEC will view the Coinbase Derivatives exchange in the same light as the CME. As of February 2025, the CME has only listed crypto derivative products for Bitcoin and Ethereum.
The SEC had used a 31-month sample period between October 2021 and March 2024 to examine the correlation between Ether futures prices and spot ETH prices.
Even if Litecoin or Solana futures contacts were to get listed on the CME today, it would take about three years to record market data as deep as the set used when the SEC discussed the approval of spot ETH ETFs.
Spot Bitcoin ETFs sent BTC prices to all time highs
SEC approval of spot Bitcoin ETFs in January of 2024 was a watershed moment for the cryptocurrency industry. It was the moment when Bitcoin was finally recognized as a legitimate investment class.
Spot BTC ETFs have enabled stock market investors, corporations, and institutions to gain exposure to the premier cryptocurrency safely and conveniently.
When the spot BTC ETFs were approved on January 10, 2024, BTC was trading at over $46,000.
Spot Bitcoin ETFs were so popular that Blackrock’s iShares Bitcoin Trust (IBIT) became the ninth most successful ETF launched of the past decade (2014-2024) with a peak asset under management valuation of about $24 billion, data compiled by CFRA showed.
The spot Bitcoin ETF achieved this feat in less than nine months of trading.
CFRA said that IBIT tapped into the “latent demand for a spot Bitcoin ETF, which existed because prior crypto investment options like futures-based crypto ETPs and closed-end fund structures had drawbacks.”
It was no surprise to see BTC scale multiple all-time high peaks in 2024. The bellwether Bitcoin eventually peaked at $109,114 on January 20, 2025, about 137% higher than its pre-spot BTC ETF price.
Spot Ether ETFs didn't have the same traction
ETH’s price performance in 2024 showed crypto investors that spot crypto ETFs do not guarantee that the underlying asset will surge in price.
Before the spot ETH ETFs were approved by the U.S. SEC on July 24, 2024, ETH closed at about $3,440.
Fast forward to February 2025, ETH prices were trading at about $2,650, about 25% below pre-spot-ETF prices, contrary to beliefs that spot crypto ETF will more or less result in price appreciation.
The low demand for spot ETH ETFs relative to spot BTC ETFs is the result of bearishness related to Ethereum’s rollup-centric scaling roadmap which has led to new network issues such as liquidity fragmentation and poor user experience.
Additionally, rival L1 blockchains such as Solana and Tron (TRX) have also eaten into Ethereum’s market share and diversified investor attention.
This is a cautionary tale for Litecoin investors who may see a spot LTC ETF approval as the catalyst to a Litecoin bull run.
However, the investing market is more complicated than that and takes into account several other factors related to technological innovation, adoption rates, blockchain use cases, and future outlook.
Is speculation driving Litecoin’s price?
The LTC token price performance over the last 90 days, as of 12th March, 2025, indicates that the cryptocurrency is benefiting from the spot LTC ETF speculation.
In this period, LTC has gained about 67%, outperforming the likes of Bitcoin (+6.6%) and Ethereum (-19%).
Fellow spot ETF hopefuls Solana and Dogecoin have lost about 6% and 37%, respectively, in the period. XRP outperformed LTC with a gain of over 250%, over the last 90 days as of February 11, 2025, on positive developments regarding its SEC lawsuit.
LTC’s all-time high stands at about $412 hit in May 2021. At the time of writing, LTC was trading about 69% below its record-high level.
Following a Litecoin bear market that saw the token bottom at about $40 in June 2022, the cryptocurrency has bounced back to trade at about $125 supported by a privacy-focused upgrade called Mimblewimble Extension Blocks (MWEB) in 2022 and Litecoin halving event in 2023.
Last Word
While decision day nears, approval of the first spot Litecoin ETF may have to wait. Despite Bloomberg analysts’ projections that LTC is the most likely cryptocurrency to secure a spot ETF in 2025, the SEC’s historical reliance on CME futures data could present a roadblock as regulators question whether Coinbase Derivatives can meet the same standard.
For Litecoin investors, the mixed impact of past spot ETF approvals on cryptocurrency prices is a key insight. Investors have to consider broader market conditions before speculating on a potential Litecoin rally.