Institutional interest in cryptocurrency ETFs has been growing rapidly, and Canary Capital is strategically positioning itself to benefit from this trend.
On October 15th, the investment firm filed an S-1 document with the U.S. Securities and Exchange Commission (SEC) to launch the first ETF specifically for Litecoin (LTC).
This submission marks the initial stage in the series of regulatory steps required to introduce the fund. The subsequent phase involves a 19b-4 filing seeking SEC approval for an exchange rule adjustment to facilitate the listing of the new ETF.
The proposed Canary Litecoin ETF will directly hold Litecoin and calculate its net asset value (NAV) daily, using the CoinDesk Litecoin Price Index (LTX) as a reference.
How did LTC Respond?
Following the news of the ETF filing, LTC experienced a surge, surpassing the $70 threshold. Analysis of the daily chart indicated that the asset had been trading within a price range for more than two months.
The inability to maintain momentum above the upper range boundary at $67 resulted in a decline in late September.
Nevertheless, a resurgence in buying pressure reversed this trend by mid-October. Additionally, a bullish crossover in the Moving Average Convergence Divergence (MACD) confirmed the positive trend.
The Current Money Flow (CMF) value of 0.12 suggested accumulation of the asset. LTC was trading at $71 at the time of reporting, reflecting a 6.3% increase over the last 24 hours.
Considering the ETH ETF Setback, is the LTC ETF a Wise Investment?
While the ETF filing has generated optimism in the market, the Ethereum (ETH) ETF’s lackluster performance serves as a cautionary tale.
Reports indicate that ETH ETFs have struggled to attract the same level of positive inflows as Bitcoin (BTC) ETFs.
The prevalence of outflows in ETH ETFs also raises doubts about the potential success of the proposed LTC ETF.
Moreover, concerns exist regarding Canary Capital’s relatively modest market presence and its limited experience in managing substantial capital.
Furthermore, Litecoin lacks the compelling narrative that has been a driving force behind the demand for BTC ETFs, potentially limiting the appeal of the ETF to institutional investors.
Canary’s XRP ETF
Notably, the Litecoin ETF represents the firm’s second foray into the crypto ETF arena. Recent reports indicated that on October 8th, Canary Capital filed for a Ripple (XRP) spot ETF.
However, the approval of the XRP ETF faces significant challenges due to the ongoing legal dispute between the SEC and Ripple. In contrast, the prospects for the Litecoin ETF seem more promising.
Earlier this year, the U.S. Commodity Futures Trading Commission (CFTC) classified Litecoin as a commodity in a complaint against KuCoin. This favorable regulatory precedent could facilitate the approval process for the ETF.