Litecoin ETFs may draw up to $580 million in inflows, provided adoption mirrors that of Bitcoin ETFs.

Litecoin (LTC) could potentially see significant inflows if its exchange-traded fund (ETF) mirrors the success of Bitcoin’s ETF offerings, with estimates suggesting inflows of up to $580 million. This projection is based on the assumption that Litecoin’s adoption follows a similar pattern to Bitcoin’s, where roughly 6% of its total supply is held in ETFs.

The prospect of Litecoin being approved for an ETF in the U.S. gained traction recently, with Canary Capital, an emerging digital asset firm, positioning itself as the likely issuer of the product. The firm initially filed its proposal for a Litecoin ETF in October, and Nasdaq officially submitted a 19b-4 filing to the U.S. Securities and Exchange Commission (SEC), marking the start of the regulatory review process.

With Litecoin sharing key technical characteristics with Bitcoin, particularly its use of a Proof of Work consensus mechanism, there is growing speculation that the SEC may approve the product. Analysts believe this similarity may position Litecoin as a commodity, which would align it with Bitcoin in the eyes of regulators, potentially facilitating a smoother approval process.

Despite the enthusiasm, the success of a Litecoin ETF will largely depend on investor demand. While it is expected that Litecoin will not generate the same level of enthusiasm as Bitcoin or Ethereum, there is still a potential market for a well-executed product.

Bitcoin ETFs made history in 2023, with the BlackRock iShares Bitcoin Fund (IBIT) outperforming expectations and becoming the most successful ETF launch in U.S. history. While analysts like Bloomberg’s James Seyffart and JPMorgan’s Kenneth B. Worthington are cautiously optimistic about Litecoin’s chances, they also caution that the market will ultimately determine its success.

The cryptocurrency sector has experienced increased ETF adoption, with Bitcoin ETFs currently holding 6% of Bitcoin’s market capitalization, a figure that is expected to rise. Meanwhile, Ethereum ETFs hold about 3% of Ethereum’s market capitalization. This adoption rate has been used to project potential inflows for other cryptocurrencies, including Solana (SOL) and XRP, with estimates of up to $14 billion in combined AUM.

If Litecoin follows a similar pattern, its ETF could attract between $290 million and $580 million in its first year. While these figures may not rival the massive sums raised by Bitcoin and Ethereum ETFs, they represent a significant milestone for Litecoin, which currently holds a $9.6 billion market cap.