Over the past few days, the stock of Grayscale Litecoin Trust (LTCN) has risen 42%.
Until 1 September it was below $16, but by 2 September it had already started to rise, exceeding $16.5.
Litecoin hit an all-time high
The rise continued the next day, with a jump above $20, and today it has risen again after the markets reopened, to over $21.5.
It is still a long way from the highs of May when it surpassed $450, but at least it is a sign of recovery after the resounding thud that led it to lose almost 97% in just under three months.
Litecoin’s price also hit an all-time high in May, when it surpassed $410, but then only fell as low as $107, before returning above $200. It is worth noting that at the beginning of the year it was just under $130.
The Grayscale Litecoin Trust is an exchange-traded fund that is fully collateralized in Litecoin (LTC). Specifically, each share currently corresponds to around 0.09 Litecoin, so with LTC at around $200, a share of LTCN should be expected to be just over $20.
In the past, this proportion has been different, so much so that on August 31 last year, for example, when the price of LTCN stabilized after its market launch, it hovered around $40, while the price of LTC was over $60.
This is an asset that over time has not exactly replicated the trend of Litecoin’s price, with price swings even wider than those of the already highly volatile underlying asset.
The various investors betting on Grayscale Litecoin Trust
It is therefore not surprising that LTCN has appreciated by 42% in the last week, while the price of LTC has only increased by half.
Note that LTCN is aimed at a different audience of investors than Litecoin itself, as it is a fund specifically designed for those who cannot, or do not want to, invest in unregulated assets such as LTC.
Institutional investors are usually the ones who invest in Grayscale’s cryptocurrency-collateralized funds, so if in the past few months it is possible to imagine a real flight of institutional capital from LTCN, in recent days the trend seems to have finally reversed.
The price of Litecoin has been rising since 1 September, after a second half of August that was not particularly brilliant, and this has probably convinced institutional investors to take exposure to LTC again.
The total AUM of the Grayscale Litecoin Trust is more than $310 million, which is a much smaller figure than the more than $13 billion of Litecoin’s entire market capitalization, and even lower than the $3.5 billion of total volume traded on LTC’s markets only yesterday.
For example, the AUM of the Grayscale Bitcoin Trust (GBTC), almost $32.5 billion, is not that much lower than yesterday’s total trading volumes on the BTC markets ($46 billion).
Thus, the success of LTCN was proportionally much smaller than that of GBTC.