Might the Unanticipated Cryptocurrency Witness a Spectacular Upsurge in 2025?
It's high time to search for a cryptocurrency that's undervalued or neglected, with a strong chance of a significant surge in 2025. In the best-case scenario, this cryptocurrency should be presently trading far below its all-time high and have a compelling investment reason for the upcoming year. It ought to as well possess a proven track record of extraordinary upward momentum.
One cryptocurrency that ticks all these boxes is Litecoin (LTC -1.50%). Despite only a 42% rise this year, Litecoin might display a far more impressive performance in 2025. Here's why.
"Lightweight Bitcoin"
As the name suggests, Litecoin is a "lite" version of Bitcoin (BTC -1.17%). It was introduced in 2011, utilizing a significant portion of the same computer code used to develop Bitcoin. Consequently, Litecoin shares many characteristics with Bitcoin. For example, it is mined identical to Bitcoin, has a halving event every four years like Bitcoin, and has a moderately small circulating coin supply, thereby providing it with almost the same level of scarcity as Bitcoin.
Litecoin's creators envisioned it as a quicker, less expensive, and more efficient variant of Bitcoin. If Bitcoin is considered "digital gold," then Litecoin is "digital silver." Although Litecoin has lost some sheen over the past decade, it remains one of the twenty-five largest cryptocurrencies in the world, boasting a nearly $8 billion market cap.
Spot ETF investment thesis
These characteristics of Litecoin are particularly significant as we move towards 2025. The reason being, Litecoin is generally viewed as less risky than other more speculative cryptocurrencies. Just like Bitcoin, Litecoin is seen as a commodity and not a security. This theoretically makes it easier for regulators to approve new products related to Litecoin.
In fact, the prevailing notion now is that Litecoin will be the next cryptocurrency to obtain a spot exchange-traded fund (ETF). As Bloomberg noted earlier this month, several other popular cryptocurrencies considered potential spot ETF candidates -- such as XRP and Solana -- might still carry excessive regulatory risk. However, Litecoin is virtually free of any regulatory concerns and has a much clearer path to Securities and Exchange Commission (SEC) approval.
Back in October, crypto investment firm Canary Capital filed an application with the SEC for a spot Litecoin ETF, and the price of Litecoin rose by 10%. Given the pro-crypto optimism surrounding the Trump administration, we might see a spot Litecoin ETF approval by mid-2025, if not sooner. If so, that could propel the price of Litecoin skyward. This is quite similar to the impact we witnessed with the launch of the new spot Bitcoin ETFs.
Does Litecoin have breakout potential?
The big question, of course, is just how much breakout potential Litecoin might have. The coin currently trades around $100, more than 75% below its all-time high of $412. This is significant because other top cryptocurrencies (such as Bitcoin) are either setting new all-time highs or are near their all-time highs. Litecoin appears to have much more room to grow.
It's intriguing to consider what happened with Litecoin during the previous crypto bull market rally back in 2020-2021. In October 2020, Litecoin was trading at around $50 and was not drawing much attention from investors. However, within seven months, Litecoin surpassed the $400 mark in May 2021. Litecoin also exhibited a similar run in 2017 when it too reached $400. Thus, we know Litecoin has enormous growth potential.
Can Litecoin repeat this performance in 2025? To answer that question, it's useful to consider the correlation between Bitcoin and Litecoin. Over the past year, the correlation between the two is a robust 0.75. The only other major altcoin with a significantly higher correlation over that time is Ethereum, which has a 0.89 correlation with Bitcoin.
This tells me that Litecoin has a relatively high probability of tracking any upward moves made by Bitcoin over the next 12 months. If you think Bitcoin will skyrocket in value next year, Litecoin could tag along for the ride.
Before you invest in Litecoin, read this
It's essential to remember that there's a reason Litecoin trades 75% below its all-time high. There's a reason it has dropped out of the top twenty cryptocurrencies by market cap. And there's a reason Litecoin has underperformed Bitcoin this year. It could possibly be the case that Litecoin's best days are behind it.
However, it's always exhilarating to discover an overlooked gem or to find a potentially wildly undervalued investment. If the SEC approves a spot Litecoin ETF next year, Litecoin could become the first breakout cryptocurrency of 2025.
Given its potential to secure a spot ETF approval due to its perceived lower regulatory risk compared to other cryptocurrencies, Litecoin could attract significant investor interest and potentially see a significant price surge in 2025. This could be similar to the impact we witnessed with the launch of new spot Bitcoin ETFs.
Moreover, Litecoin's correlation with Bitcoin over the past year is high, indicating that it has a relatively high probability of tracking any upward moves made by Bitcoin. If Bitcoin has a strong showing in 2025, Litecoin, as a "silver to Bitcoin's gold," might also experience a significant price increase.
