The cryptocurrency market is rebounding from a brutal sell-off, with Litecoin (LTC) spearheading the recovery. The coin’s price surged 16% in the past 24 hours, signaling renewed investor confidence.

At the time of this publication, the digital asset had surged to $123 despite a 9% price decline in the past week. The anticipation surrounding a potential Litecoin exchange-traded fund (ETF) is further fueling optimism.

Trading Volumes and Onchain Activity

While trading volume remains subdued, on-chain activity suggests increasing institutional and retail interest in the digital asset. Despite lingering volatility, LTC has steadily regained ground after the broader crypto market endured a $1.4 billion liquidation event.

Currently, the crypto industry faces a significant sell-off, with the global market capitalization below the $3 trillion mark. Bitcoin trades at $87k, representing a 1% and 8% decline in the past day and week, respectively.

On the other hand, the second-largest cryptocurrency, Ethereum, is changing hands for $2,429 after a 10% drop in the last week. The decline followed a major hack suffered by crypto exchange Bybit, which resulted in record losses of up to $1.5 billion.

Market analysts believe that Litecoin’s resilience could indicate a broader trend reversal for altcoins . One of the primary catalysts behind Litecoin’s surge is the increasing likelihood of an ETF approval.

Bloomberg analysts James Seyffart and Eric Balchunas estimate a 90% chance that the U.S. Securities and Exchange Commission (SEC) will greenlight a Litecoin-based ETF, CryptoPotato reported.

Canary Capital has already filed for a Litecoin ETF, with the SEC acknowledging the application and beginning its review process. If approved, the fund would allow institutional investors to gain exposure to LTC without directly holding the asset, potentially boosting demand.

On-Chain Activity and Market Sentiment

Litecoin’s recent rally aligns with a surge in on-chain activity. According to Santiment, the coin has processed $9.6 billion in daily transaction volume over the past week, marking a staggering 243% increase from just five months ago.

Despite its recent gains, Litecoin still faces resistance at the $140 level, with analysts predicting a potential rally to $170 if bullish momentum continues. The cryptocurrency has already climbed more than 40% between February 2 and February 19, far outpacing broader market gains.

However, traders remain cautious, noting that market sentiment could shift if the SEC delays or rejects the ETF proposal. For now, Litecoin’s resurgence places it at the forefront of the altcoin recovery, with investors closely watching for further developments in the ETF space.