GRAYSCALE LITECOIN TRUST (LTC) Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following discussion and analysis of our financial condition and results of
operations should be read together with, and is qualified in its entirety by
reference to, our unaudited financial statements and related notes included
elsewhere in this Quarterly Report, which have been prepared in accordance with
generally accepted accounting principles in the United States ("U.S. GAAP"). The
following discussion may contain forward-looking statements based on assumptions
we believe to be reasonable. Our actual results could differ materially from
those discussed in these forward-looking statements. Factors that could cause or
contribute to these differences include, but are not limited to, those set forth
under Part II, Item 1A. Risk Factors in this Quarterly Report and under "Risk
Factors" and the other sections of the Information Statement.

Trust Overview


The Trust is a passive entity that is managed and administered by the Sponsor
and does not have any officers, directors or employees. The Trust holds LTC and,
from time to time on a periodic basis, issues Creation Baskets in exchange for
deposits of LTC. As a passive investment vehicle, the Trust's investment
objective is for the value of the Shares (based on LTC per Share) to reflect the
value of LTC held by the Trust, determined by reference to the index price (the
"Index Price") of an LTC in U.S. dollars calculated by applying a weighting
algorithm to the price and trading volume data for the immediately preceding
24-hour period as of 4:00 p.m.New York time derived from the selected digital
asset exchanges that are reflected in the Index on such trade date, less the
Trust's expenses and other liabilities. To date, the Trust has not met its
investment objective and the Shares quoted on OTCQX have not reflected the value
of LTC held by the Trust, less the Trust's expenses and other liabilities, but
instead have traded at both premiums and discounts to such value, with
variations that have at times been substantial. The Trust is not managed like a
business corporation or an active investment vehicle.

Prior to February 1, 2022 and for the periods covered by this report, the Trust
valued its LTC for operational purposes by reference to the volume-weighted
average index price (the "Old Index Price") of an LTC in U.S. dollars calculated
by applying a weighting algorithm to the price and trading volume data for the
immediately preceding 24-hour period as of 4:00 p.m., New York time derived from
the selected digital asset exchanges that are reflected in the Index on such
trade date. The Old Index Price was calculated using the same methodology as the
Index Price with an additional averaging mechanism overlaid to the price
produced resulting in the Old Index Price reflecting an average price for the
24-hour period. Effective February 1, 2022, the Trust ceased using the Old Index
Price and began valuing its LTC for operational purposes by reference to the
Index Price. There was no change to the Index used to determine the Index Price
or the criteria used to select the digital asset exchanges included in the
Index.

Critical Accounting Policies and Estimates

Investment Transactions and Revenue Recognition


The Trust considers investment transactions to be the receipt of LTC for Share
creations and the delivery of LTC for Share redemptions or for payment of
expenses in LTC. At this time, the Trust is not accepting redemption requests
from shareholders. The Trust records its investment transactions on a trade date
basis and changes in fair value are reflected as net change in unrealized
appreciation or depreciation on investments. Realized gains and losses are
calculated using the specific identification method. Realized gains and losses
are recognized in connection with transactions including settling obligations
for the Sponsor's Fee in LTC.

Principal Market and Fair Value Determination


To determine which market is the Trust's principal market (or in the absence of
a principal market, the most advantageous market) for purposes of calculating
the Trust's NAV, the Trust follows Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 820-10, which outlines the application
of fair value accounting. ASC 820-10 determines fair value to be the price that
would be received for LTC in a current sale, which assumes an orderly
transaction between market participants on the measurement date. ASC 820-10
requires the Trust to assume that LTC is sold in its principal market to market
participants or, in the absence of a principal market, the most advantageous
market. Market participants are defined as buyers and sellers in the principal
or most advantageous market that are independent, knowledgeable, and willing and
able to transact.

The Trust only receives LTC from the Authorized Participant and does not itself
transact on any Digital Asset Markets. Therefore, the Trust looks to the
Authorized Participant when assessing entity-specific and market-based volume
and level of activity for Digital Asset Markets. The Authorized Participant
transacts in a Brokered Market, a Dealer Market, Principal-to-Principal Markets
and Exchange Markets, each as defined in the FASB ASC Master Glossary. The
Authorized Participant, as a related party of the Sponsor, provides information
about the Digital Asset Markets on which it transacts to the Trust. In
determining which of the eligible Digital Asset Markets is the Trust's principal
market, the Trust reviews these criteria in the following order:

First, the Trust reviews a list of Digital Asset Markets and excludes any
Digital Asset Markets that are non-accessible to the Trust and the Authorized
Participant(s). The Trust or the Authorized Participant does not have access to
Digital Asset Exchanges that do not have a BitLicense and has access only to
non-Digital Asset Exchange Markets that the Authorized

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Participant reasonably believes are operating in compliance with applicable law,
including federal and state licensing requirements, based upon information and
assurances provided to it by each market.
•
Second, the Trust sorts the remaining Digital Asset Markets from high to low by
entity-specific and market-based volume and activity of LTC traded on each
Digital Asset Market in the trailing twelve months.
•
Third, the Trust then reviews intra-day pricing fluctuations and the degree of
variances in price on Digital Asset Markets to identify any material notable
variances that may impact the volume or price information of a particular
Digital Asset Market.
•
Fourth, the Trust then selects a Digital Asset Market as its principal market
based on the highest market volume, activity and price stability in comparison
to the other Digital Asset Markets on the list. Based on information reasonably
available to the Trust, Exchange Markets have the greatest volume and level of
activity for the asset. The Trust therefore looks to accessible Exchange Markets
as opposed to the Brokered Market, Dealer Market and Principal-to-Principal
Markets to determine its principal market. As a result of the aforementioned
analysis, an Exchange Market has been selected as the Trust's principal market.

The Trust determines its principal market (or in the absence of a principal
market the most advantageous market) annually and conducts a quarterly analysis
to determine (i) if there have been recent changes to each Digital Asset
Market's trading volume and level of activity in the trailing twelve months,
(ii) if any Digital Asset Markets have developed that the Trust has access to,
or (iii) if recent changes to each Digital Asset Market's price stability have
occurred that would materially impact the selection of the principal market and
necessitate a change in the Trust's determination of its principal market.

The cost basis of the investment in LTC recorded by the Trust for financial
reporting purposes is the fair value of LTC at the time of transfer. The cost
basis recorded by the Trust may differ from proceeds collected by the Authorized
Participant from the sale of the corresponding Shares to investors.

Investment Company Considerations


The Trust is an investment company for GAAP purposes and follows accounting and
reporting guidance in accordance with the FASB ASC Topic 946, Financial Services
- Investment Companies. The Trust uses fair value as its method of accounting
for LTC in accordance with its classification as an investment company for
accounting purposes. The Trust is not a registered investment company under the
Investment Company Act of 1940. GAAP requires management to make estimates and
assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates and these
differences could be material.

Review of Financial Results (unaudited)

Financial Highlights for the Three and Six Months Ended December 31, 2021 and
2020

(All amounts in the following table and the subsequent paragraphs, except Share
and per Share, LTC and price of LTC amounts, are in thousands)


                                     Three Months Ended December 31,        

Six Months Ended December 31,

                                       2021                   2020                2021                  2020
Net realized and unrealized
(loss) gain on investment in
Litecoin                         $        (11,407 )     $         69,595     $         4,932       $        67,171
Net (decrease) increase in net
assets resulting from
operations                       $        (13,267 )     $         69,206     $         1,511       $        66,691
Net assets                       $        225,204$        143,705$       225,204$       143,705


Net realized and unrealized loss on investment in LTC for the three months ended
December 31, 2021 was ($11,407) which includes a realized gain of $937 on the
transfer of LTC to pay the Sponsor's Fee and net change in unrealized
depreciation on investment in LTC of ($12,344). Net realized and unrealized loss
on investment in LTC for the period was driven by LTC price depreciation from
$151.61 per LTC as of September 30, 2021 to $144.08 per LTC as of December 31,
2021. Net decrease in net assets resulting from operations was ($13,267) for the
three months ended December 31, 2021, which consisted of the net realized and
unrealized loss on investment in LTC, plus the Sponsor's Fee of $1,860. Net
assets decreased to $225,204 at December 31, 2021, a 6% decrease for the
three-month period. The decrease in net assets resulted from the aforementioned
LTC price depreciation and the withdrawal of approximately 9,881 LTC to pay the
foregoing Sponsor's Fee.

Net realized and unrealized gain on investment in LTC for the three months ended
December 31, 2020 was $69,595 which includes a realized gain of $104 on the
transfer of LTC to pay the Sponsor's Fee and net change in unrealized
appreciation on investment in LTC of $69,491. Net realized and unrealized gain
on investment in LTC for the period was driven by LTC price appreciation from
$45.88 per LTC as of September 30, 2020 to $124.49 per LTC as of December 31,
2020. Net increase in net assets resulting from operations

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was $69,206 for the three months ended December 31, 2020, which consisted of the
net realized and unrealized gain on investment in LTC, less the Sponsor's Fee of
$389. Net assets increased to $143,705 at December 31, 2020, a 437% increase for
the three-month period. The increase in net assets resulted from the
aforementioned LTC price appreciation and the contribution of approximately
575,594 LTC with a value of $47,717 to the Trust in connection with Share
creations during the period, partially offset by the withdrawal of approximately
4,983 LTC to pay the foregoing Sponsor's Fee.

Net realized and unrealized gain on investment in LTC for the six months ended
December 31, 2021 was $4,932 which includes a realized gain of $1,576 on the
transfer of LTC to pay the Sponsor's Fee and net change in unrealized
appreciation on investment in LTC of $3,356. Net realized and unrealized gain on
investment in LTC for the period was driven by LTC price appreciation from
$141.61 per LTC as of June 30, 2021 to $144.08 per LTC as of December 31, 2021.
Net increase in net assets resulting from operations was $1,511 for the six
months ended December 31, 2021, which consisted of the net realized and
unrealized gain on investment in LTC, less the Sponsor's Fee of $3,421. Net
assets increased to $225,204 at December 31, 2021, a 3% increase for the period.
The increase in net assets resulted from the aforementioned LTC price
appreciation and the contribution of approximately 36,070 LTC with a value of
$4,659 to the Trust in connection with Share creations during the period,
partially offset by the withdrawal of approximately 19,765 LTC to pay the
foregoing Sponsor's Fee.

Net realized and unrealized gain on investment in LTC for the six months ended
December 31, 2020 was $67,171 which includes a realized gain of $102 on the
transfer of LTC to pay the Sponsor's Fee and net change in unrealized
appreciation on investment in LTC of $67,069. Net realized and unrealized gain
on investment in LTC for the period was driven by LTC price appreciation from
$41.15 per LTC as of June 30, 2020 to $124.49 per LTC as of December 31, 2020.
Net increase in net assets resulting from operations was $66,691 for the six
months ended December 31, 2020, which consisted of the net realized and
unrealized gain on investment in LTC, less the Sponsor's Fee of $480. Net assets
increased to $143,705 at December 31, 2020, a 7,168% increase for the period.
The increase in net assets resulted from the LTC price appreciation and the
contribution of approximately 1,113,036 LTC with a value of $75,037 to the Trust
in connection with Share creations during the period, partially offset by the
withdrawal of approximately 6,739 LTC to pay the foregoing Sponsor's Fee.

Off-Balance Sheet Arrangements

The Trust is not a party to any off-balance sheet arrangements.

Cash Resources and Liquidity


The Trust has not had a cash balance at any time since inception. When selling
LTC, Incidental Rights and/or IR Virtual Currency in the Digital Asset Market to
pay Additional Trust Expenses, the Sponsor endeavors to sell the exact number of
LTC, Incidental Rights and/or IR Virtual Currency needed to pay expenses in
order to minimize the Trust's holdings of assets other than LTC. As a
consequence, the Sponsor expects that the Trust will not record any cash flow
from its operations and that its cash balance will be zero at the end of each
reporting period.

In exchange for the Sponsor's Fee, the Sponsor has agreed to assume most of the
expenses incurred by the Trust. As a result, the only ordinary expense of the
Trust during the periods covered by this Quarterly Report was the Sponsor's Fee.
The Trust is not aware of any trends, demands, conditions or events that are
reasonably likely to result in material changes to its liquidity needs.

Selected Operating Data


                                   Three Months Ended December 31,          

Six Months Ended December 31,

                                       2021                 2020                2021                2020
LTC:
Opening balance                         1,572,925             583,738            1,546,739            48,052
Creations                                       -             575,594               36,070         1,113,036
Sponsor's Fee, related party               (9,881 )            (4,983 )            (19,765 )          (6,739 )
Closing balance                         1,563,044           1,154,349            1,563,044         1,154,349
Accrued but unpaid Sponsor's
Fee, related party                              -                   -                    -                 -
Net closing balance                     1,563,044           1,154,349            1,563,044         1,154,349
Number of Shares:
Opening balance                        17,204,700           6,227,300           16,812,000           509,400
Creations                                       -           6,165,100              392,700        11,883,000
Closing balance                        17,204,700          12,392,400           17,204,700        12,392,400




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                                                               As of 

December 31,

                                                                2021        

2020

Price of LTC on principal market (1)                         $   144.08$ 124.49
NAV per Share (2)                                            $    13.09$  11.60
Old Index Price (3)                                          $   148.49

$ 126.00Digital Asset Holdings per Share using Old Index Price (3) $ 13.49$ 11.74

(1)

The Trust performed an assessment of the principal market at December 31, 2021
and 2020, and identified the principal market as Coinbase Pro.
(2)
As of December 31, 2021 and 2020 the NAV per Share was calculated using the fair
value of LTC based on the price provided by Coinbase Pro, the Digital Asset
Exchange that the Trust currently considers its principal market, as of 4:00
p.m., New York time, on the valuation date.
(3)
Prior to February 1, 2022 and for the periods covered by this report, the
Digital Asset Holdings per Share was derived from the Old Index Price. The Old
Index Price was calculated using non-GAAP methodology and is not used in the
Trust's financial statements. Effective February 1, 2022, the Digital Asset
Holdings per Share is derived from the Index Price. See "-Historical Digital
Asset Holdings and LTC Prices" for further information on the Trust's Digital
Asset Holdings and Digital Asset Holdings per Share calculated using the Index
Price. The Digital Asset Exchanges included in the Index as of December 31, 2021
and 2020 were Coinbase Pro, Bitstamp, Kraken and LMAX Digital.

For accounting purposes, the Trust reflects creations and the LTC receivable
with respect to such creations on the date of receipt of a notification of a
creation but does not issue Shares until the requisite number of LTC is
received. At this time, the Trust is not accepting redemption requests from
shareholders. Subject to receipt of regulatory approval from the SEC and
approval by the Sponsor in its sole discretion, the Trust may in the future
operate a redemption program. The Trust currently has no intention of seeking
regulatory approval to operate an ongoing redemption program.

As of December 31, 2021, the Trust had a net closing balance with a value of
$232,096,431, based on the Old Index Price (non-GAAP methodology). As of
December 31, 2021, the Trust had a total market value of $225,203,406, based on
the principal market (Coinbase Pro).

As of December 31, 2020, the Trust had a net closing balance with a total value
of $145,448,033, based on the Old Index Price (non-GAAP methodology). As of
December 31, 2020, the Trust had a total market value of $143,704,965, based on
the principal market (Coinbase Pro).

Historical Digital Asset Holdings and LTC Prices


As movements in the price of LTC will directly affect the price of the Shares,
investors should understand recent movements in the price of LTC. Investors,
however, should also be aware that past movements in the LTC price are not
indicators of future movements. Movements may be influenced by various factors,
including, but not limited to, government regulation, security breaches
experienced by service providers, as well as political and economic
uncertainties around the world.

For the period from January 1, 2019 to December 31, 2021, the average difference
in price between the Old Index Price and the Index Price and the average
difference in Digital Asset Holdings of the Trust as calculated using the Old
Index Price and the Index Price was 0.31%.

The following chart illustrates the movement in the Index Price, the Old Index
Price, the Trust's Digital Asset Holdings per Share based on the Old Index Price
and the Index Price and the Trust's net asset value per share as calculated in
accordance with GAAP from March 1, 2018 (date of the first Creation Basket of
the Trust) to December 31, 2021.

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                     [[Image Removed: img84845398_0.jpg]]

The following table illustrates the movements in the Old Index Price from the
beginning of the Trust's operations on March 1, 2018 to December 31, 2021. Since
the beginning of the Trust's operations, the Old Index Price has ranged from
$22.81 to $391.06, with the straight average being $99.90. The Sponsor has not
observed a material difference between the Old Index Price and average prices
from the constituent Digital Asset Exchanges individually or as a group.

                                                   High                         Low
                                                                                                                  Last
                                         Old Index                   Old Index                    End of        business
Period                      Average        Price           Date        Price           Date       period          day
March 1, 2018 (the first
Creation Basket of the
Trust) to December 31,
2018                        $  87.16$   212.04      3/5/2018    $    22.81     12/14/2018   $   30.69$    30.69
Twelve months ended
December 31, 2019           $  68.88$   138.93     6/12/2019    $    30.64     1/29/2019    $   41.77$    41.77
Twelve months ended
December 31, 2020           $  56.01$   132.00     12/27/2020   $    32.75     3/13/2020    $  126.00$   126.00
Twelve months ended
December 31, 2021           $ 185.60$   391.06     5/11/2021    $   108.07     7/20/2021    $  148.49$   148.49March 1, 2018 (the first
Creation Basket of the
Trust) to December 31,
2021                        $  99.90$   391.06     5/10/2021    $    

22.81 12/14/2018$ 148.49$ 148.49



The following table illustrates the movements in the Index Price from the
beginning of the Trust's operations on March 1, 2018 to December 31, 2021. Since
the beginning of the Trust's operations, the Index Price has ranged from $22.48
to $371.71, with the straight average being $100.04. The Sponsor has not
observed a material difference between the Index Price and average prices from
the constituent Digital Asset Exchanges individually or as a group.

                                                     High                           Low
                                                                                                                        Last
                                                                                                        End of        business
Period                      Average       Index Price         Date       Index Price         Date       period          day
March 1, 2018 (the first
Creation Basket of the
Trust) to December 31,
2018                        $  87.05$      213.58      3/1/2018    $       22.48     12/14/2018   $   29.87$    29.87
Twelve months ended
December 31, 2019           $  69.24$      142.00     6/22/2019    $       29.96     1/13/2019    $   40.99$    40.99
Twelve months ended
December 31, 2020           $  56.14$      133.63     12/26/2020   $       32.16     3/16/2020    $  124.33$   124.33
Twelve months ended
December 31, 2021           $ 185.76$      371.71     5/11/2021    $      108.80     7/20/2021    $  144.08$   144.08March 1, 2018 (the first
Creation Basket of the
Trust) to December 31,
2021                        $ 100.04$      371.71     5/11/2021    $       22.48     12/14/2018   $  144.08$   144.08




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The following table illustrates the movements in the Digital Asset Market price
of LTC, as reported on the Trust's principal market, from the beginning of the
Trust's operations on March 1, 2018 to December 31, 2021. Since the beginning of
the Trust's operations, the price of LTC has ranged from $22.47 to $371.96, with
the straight average being $100.05.

                                                    High                         Low
                                           Digital                      Digital
                                            Asset                        Asset                                      Last
                                           Market                       Market                      End of        business
Period                      Average         Price           Date         Price           Date       period          day
March 1, 2018 (the first
Creation Basket of the
Trust) to December 31,
2018                        $  87.08$    213.49      3/1/2018    $     22.47     12/14/2018   $   29.86$    29.86
Twelve months ended
December 31, 2019           $  69.24$    141.89     6/22/2019    $     29.93     1/13/2019    $   41.01$    41.01
Twelve months ended
December 31, 2020           $  56.14$    133.64     12/26/2020   $     32.27     3/16/2020    $  124.49$   124.49
Twelve months ended
December 31, 2021           $ 185.77$    371.96     5/11/2021    $    108.83     7/20/2021    $  144.08$   144.08March 1, 2018 (the first
Creation Basket of the
Trust) to December 31,
2021                        $ 100.05$    371.96     5/11/2021    $     

22.47 12/14/2018$ 144.08$ 144.08



The following chart sets out the historical closing prices for the Shares as
reported by OTCQX and the Trust's Digital Asset Holdings per Share based on the
Index Price and the Old Index Price.

 LTCN Premium/(Discount): LTCN Share Price vs. Digital Asset Holdings per Share
                                      ($)

                     [[Image Removed: img84845398_1.jpg]]

The following chart sets out the historical premium and discount for the Shares
as reported by OTCQX and the Trust's Digital Asset Holdings per Share based on
the Index Price and the Old Index Price.

 LTCN Premium/(Discount): LTCN Share Price vs. Digital Asset Holdings per Share
                                      (%)

                     [[Image Removed: img84845398_2.jpg]]



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