The approval of Canary Capital's Litecoin ETF application by the SEC was postponed, leading to a 5% drop in LTC's price. The delay triggered public comments concerning the proposal's adherence to regulatory standards, causing a bearish reaction in the market.

The SEC's decision to seek public input on the application does not necessarily indicate their stance on approving the ETF, as it could be a routine delay tactic. Speculations had previously favored the approval of the Litecoin ETF, with analysts suggesting its higher chances compared to other altcoin ETFs. Despite initial optimism, the SEC's postponement has now created uncertainty within the community.

The SEC's request for comments on the proposal aims to assess its efficacy in preventing fraudulent activities and manipulation. The market's negative response to the delay may be fueled by the recent surge in altcoin ETF applications facing postponements. LTC's price dipped immediately following the announcement, with Polymarket reflecting lower odds for a Litecoin ETF approval in Q2 2025.

Although the delay may not necessarily signal a rejection, investor sentiment has been impacted, with many reevaluating their positions in the altcoin market. The speculation concerning potential altcoin ETF approvals in Q2 now appears less certain. Despite the market's reaction, it remains unclear whether the SEC intends to reject the Litecoin ETF proposal or others.