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LTCN-OP

What is LTCN-OP?

LTCN-OP is a product that enables option trading of the exchange-traded fund, Grayscale Litecoin Trust (LTCN), provided by Grayscale Investments (Grayscale), the world's largest cryptocurrency investment trust.

Grayscale is one of the few crypto-related companies registered as a reporting company with the US Securities and Exchange Commission (SEC). LTCN is one of the 14 types of investment trust products handled by the firm.

LTCN has been available since March 1, 2018. Despite being affected by price fluctuations caused by Litecoin (LTC), it has the advantage that users do not need to manage purchases, transfers, storage, personal accounts, wallets and private keys themselves. It provides users with a sense of security (Coinbase Custody Trust Company strictly manages the offline or cold storage).

Also, when large investors buy LTC on the market, it usually has a significant impact on the market price. In contrast, since Grayscale processes LTCN orders on exchanges and over-the-counter transactions (OTCs), it can offer them at average prices based on the TradeBlock LTX Index.

LTCN-OP makes it possible to buy and sell LTCN beneficiary rights.

Features of LTCN

Linked with the market price of Litecoin (LTC)

LTCN is an exchange-traded fund product designed to track LTC's market price.
In other words, the price of LTC is very important for LTCN.

However, LTCN and LTC are not linked on a one-to-one basis. Although the valuation source is LTC, there can be a discrepancy between the prices of the cryptocurrency and the investment trust stock.

What is Litecoin (LTC)?

Litecoin (LTC) is a cryptocurrency that was conceived by Google engineer Charlie Lee and was first created in October 2011.

While Bitcoin (BTC) is often called digital gold, LTC has come to be known as digital silver.

Furthermore, LTC was developed with the aim of compensating for the shortcomings of BTC.

Why LTCN-OP can be purchased below the market price

Grayscale’s LTCN exchange-traded fund has been sold to institutional investors with proven assets of over $ 500 million in the United States.

It is said that a common need of large institutional investors is to liquidate securities without changing their prevailing market prices. LTCN-OP is a product that meets the financial needs of institutional investors who want to obtain "cash now, even if I have to offer a discount."

LTCN-OP sells beneficiary interests for $100 per share, enabling users to obtain LTCN below the prevailing market price.

However, if something bought so cheaply is sold immediately on the open market, the price could collapse. For this reason, the investment must be held in lockup for 12 months before it can be sold.

Also, because the product is purchased at a price significantly lower than its market value, users will be charged a 20% sales fee when they sell their beneficiary rights.

About option trading and beneficiary rights

Option trading is a type of financial product derivative with which the right to trade a certain underlying asset at a predetermined price on a predetermined date or period in the future is obtained.

There are no voting rights associated with the shares held in this way, but there are products that have the right to receive 100% of the profit from price movements (sale price). That is LTCN-OP.

After 12 months, the account is unlocked and LTCN Beneficiary (LTCN-OP) buyers may sell at any time. Selling when the 12-month period is completed is not mandatory, however. The decision to sell or hold is up to each investor.

Please bear in mind that, the beneficiary right purchaser does not buy or sell the shares of LTCN itself, but rather the rights to the profit or loss. That is LTCN-OP.

Advantages and disadvantages of purchasing LTCN-OP

Up to this point, we have been describing and explaining LTCN-OP. The following is a summary of the advantages and disadvantages of purchasing LTCN-OP.

Advantages

The benefits of purchasing LTCN-OP are:

  • The products are offered by Grayscale, which is registered with the US Securities and Exchange Commission (SEC).
  • Prices are linked to LTC, which has come to be known as digital silver
  • No need for users to buy, transfer, store or manage accounts, wallets and private keys for cryptocurrencies themselves
  • Underlying assets are tightly managed with offline or cold storage
  • LTCN can be obtained below the prevailing market price
  • Purchased beneficiary rights can be sold at any time (after the 12-month lockup)

Disadvantages

he disadvantages of purchasing LTCN-OP are:

  • There is a 12-month lockup period (Major cryptocurrencies are fast-growing assets whose value is increasing over time. Long-term holdings and investment with surplus funds are recommended.)
  • A 20% exit fee is charged at the time of sale (Because no fees are charged in advance, the fee will be large if a large profit is generated, but small if the profit is not so high.)
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