Litecoin Futures Open Interest increase to a Record US$584 Million, Signalling Institutional Inflow

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The futures contracts of Litecoin (LTC), the 7th largest cryptocurrency by market capitalization, has reached a record high of US$584 million. In the last 3-months, the aggregate open interest of LTC increased by 285%. Experts believe that this record-high open interest of Litecoin Futures may allow even more substantial players such as institutional investors to participate.

It is important to note that this record high level of LTC’s futures contracts are reached at a time when Litecoin’s spot price is 60% below the all-time high of US$420 in December 2017.

Another interesting development that has taken place currently is the listing of Ether futures contracts on the Chicago Mercantile Exchange (CME). Many experts point out that this may lead to futures contracts listings of other cryptocurrencies too.

On the Bitwise 10 Crypto Index Fund (BITW), Litecoin is the 3rd largest holding. The AUM (assets under management) in this index fund has crossed the US$780 million mark recently. Grayscale Litecoin Trust (LTCN), a financial trust that focuses on Litecoin, has also added US$210 million worth of assets under management. This information points to the fact that there is immense potential for Litecoin, waiting to be tapped.

Litecoin’s price recently increased by 15% to reach US$174. However, its failure to break above the US$186 (reached on January 10, 2021) led to a fall in volume. It indicates that there is a lack of interest at the current levels. In the last 30-days, the total trading volume of Litecoin (LTC) decreased by 12%.

When matched with the US$980 million daily average trading volume of Litecoin on the spot market, the current futures open interest is substantial. Both Litecoin (LTC) and Bitcoin Cash (BCH) lag bearish and bullish moves from Bitcoin. Both the institutional and retail investors know about this relationship.

The next Litecoin price rally may be fuelled by the investors (both institutional and retail) who are looking for faster transfers and cheaper fees. Many believe that the high gas fees of Ethereum (ETH) and rising transaction costs of Bitcoin (BTC) may make many investors divert their funds to Litecoin (LTC).

The market is eagerly waiting for the implementation of the privacy features of Litecoin. Once this is done, there are high chances that the Litecoin price breaks above the US$186 level (reached on Jan 10, 2021) and move above the psychological resistance at US$200. Some analysts also believe that the targets near the US$300 level are also not outrageous.