Canary Capital applies for Litecoin ETF. LTC soared 6.3% after filing.
Demand from institutional investors for crypto exchange-traded funds (ETFs) is rapidly increasing, and Canary Capital is poised to take full advantage of this momentum.
On October 15, the investment management company filed an S-1 application with the U.S. Securities and Exchange Commission (SEC) to launch the first Litecoin (LTC) ETF.
This application represents the first step in the regulatory process necessary for the introduction of the Fund. The next step is a 19b-4 filing, which asks the SEC to approve an exchange rule change to allow the new ETF to be listed.
The proposed Canary Litecoin ETF directly holds Litecoin and determines its net asset value (NAV) daily by reference to the CoinDesk Litecoin Price Index (LTX).
How did LTC react?
Following the announcement of the ETF filing, LTC soared above $70. An analysis of the daily chart reveals that the asset has been trading within a range for more than two months.
The failure to maintain momentum above the $67 range led to a pullback in late September.
Source: TradingView
Nevertheless, this level reversed by mid-October due to a resurgence of buying pressure. Additionally, the MACD formed a bullish crossover, demonstrating positive momentum.
CMF’s value at press time of 0.12 indicated an accumulation of assets. At the time of writing, LTC is trading at $71, up 6.3% in the past 24 hours.
Is the LTC ETF a smart bet after the ETH ETF downturn?
While this filing has brought optimism to the market, the underwhelming performance of the Ethereum (ETH) ETF is cause for caution.
AMBCrypto recently noted that the ETH ETF faces challenges in attracting positive inflows similar to the Bitcoin (BTC) ETF.
The preponderance of ETH ETF outflows also raises concerns about the potential success of the proposed LTC ETF.
Additionally, Canary Capital’s relatively limited market presence and lack of experience in managing large capitals may pose challenges.
Finally, Litecoin lacks a compelling story to stimulate demand for the BTC ETF, which could further limit the ETF’s appeal to institutional investors.
Canary XRP ETF
Interestingly, the Litecoin ETF is the company’s second planned venture into the crypto ETF space. AMBCrypto reported on October 8 that Canary Capital filed for a Spot Ripple (XRP) ETF.
However, the approval of the XRP ETF faces a major hurdle due to the ongoing legal battle between the SEC and Ripple. In contrast, the outlook for Litecoin ETFs appears to be more favorable.
Earlier this year, the U.S. Commodity Futures Trading Commission (CFTC) classified Litecoin as a commodity in its complaint against KuCoin. This positive regulatory precedent could ease the ETF approval process.
Source: CFTC
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