Bloomberg analyst: There is a 90% chance that Litecoin ETF will be approved this year

Author: Brayden Lindrea, CoinTelegraph; Compiled by Wuzhu, Golden Finance

Bloomberg exchange-traded fund (ETF) analysts predict that there is a 90% chance that U.S. securities regulators will approve a spot Litecoin ETF by the end of this year.

Bloomberg's James Seyffart and Eric Balchunas believe that Litecoin has a higher chance of being approved in 2025 than other ETFs currently proposed, including spot XRP, SOl, and Dogecoin ETFs - they believe the probability of approval for these ETFs is 65%, 70%, and 75%, respectively.

Litecoin was created in 2011 as a faster alternative to Bitcoin, using a similar proof-of-work consensus mechanism as Bitcoin ...

The two posted on X that Litecoin's path to SEC approval may be the most direct, as the S-1 and 19b-4 forms have been filed and admitted, and the SEC may also consider it a commodity.

Competing for the SEC's list of candidate crypto ETFs approved. Source: James Seyffart

Competition for cryptocurrency ETFs heats up amid strong demand for spot Bitcoin and Ethereum ETFs, according to Farside Investors. Since launching in January and July 2024, the two ETFs have seen net inflows of $40.7 billion and $3.18 billion, respectively.

While Seyffart doesn’t think a Litecoin ETF will attract as much demand, he said it could still be worthwhile in some cases for a fund with as little as $50 million in its treasury.

“From an issuer’s perspective, they don’t have to be a huge success in liquidity to get value,” Seyffart noted.

Seyffart’s chart shows the SEC’s deadline for decisions on Litecoin, Solana, XRP, and Dogecoin ETFs is between Oct. 2 and Oct. 18. Seyffart said a litecoin ETF could launch before then.

Seyffart and Balchunas also acknowledged that Canary Capital and 21Shares have filed ETFs for Hedera and Polkadot, but have not announced any approval probabilities as of this writing.

Expect More Crypto ETF Applications

Seyffart said more crypto ETFs could be proposed.

“Issuers are going to try to launch a lot of different things and see which ones succeed,” Seyffart said.

“In the long run, you’re likely to see a large number of ETFs that hold digital assets, and those that aren’t earning interest or liquidity will be liquidated.”

Balchunas noted that all of these cryptocurrency ETFs (except Litecoin) have a less than 5% chance of winning before U.S. President Donald Trump wins the U.S. election on November 5, 2024.

XRP, Solana Regulatory Work Still to Be Done

Meanwhile, the security status of Solana and XRP remains in question, and Seyffart predicts that the XRP ETF will not be approved until the SEC’s lawsuit against Ripple is fully resolved.

Ripple scored a partial victory in August 2023 when it was ruled that XRP was not a security when sold on the secondary market - however, the SEC appealed this decision, claiming that Ripple violated securities laws when selling XRP to retail investors.

However, these actions were taken under the SEC led by Gary Gensler, and Ripple now hopes that the new SEC leadership, led by Acting Chairman Mark Uyeda, will withdraw the enforcement case.

Seyffart said last month that Solana’s security status also needs to be addressed before the SEC can analyze Solana under a “commodity ETF wrapper.”