TLDR:
- Founder of Mechanism Capital, Andrew Kang, predicts a 30% fall in Ether price to $2,400 after the launch of spot Ether exchange-traded funds.
- Kang believes that the expectations of crypto natives for Ether ETFs are overinflated and disconnected from the preferences of traditional financial allocators.
Ethereum could see a significant decline in price following the launch of spot Ether exchange-traded funds (ETFs), according to Andrew Kang, a founder and partner at the crypto-focused venture capital firm Mechanism Capital. Kang predicts that Ether could tumble as low as $2,400, a nearly 30% fall from its current price of $3,410. While Bitcoin has attracted significant institutional interest, Kang argues that Ether lacks similar incentives, and the network cash flows have been underwhelming.
Kang believes that the upside potential for an Ether ETF launch is limited and does not expect a significant increase in price. He anticipates that spot Ether ETFs will attract only a fraction of the flows that spot Bitcoin ETFs have seen. Kang’s price prediction has sparked a debate among industry analysts, with differing opinions on how Ether will perform post-ETF launch.
Despite some industry analysts projecting a positive impact on Ether’s price, Kang remains skeptical about Ethereum’s valuation. He questions the justification for Ether’s price based on its revenue and earnings ratios, comparing it to an overpriced tech stock. Kang also highlights the challenges of marketing spot Ether ETFs to institutional investors and suggests that the removal of staking from the proposed ETFs could deter conversions.
While some financial institutions have started exploring real-world asset tokenization on Ethereum, Kang doubts the impact on Ether’s price. He predicts a potential slide in the ETH/BTC price ratio over the next 12 months but suggests that a Bitcoin price rally could propel Ether to a new all-time high. Overall, Kang’s analysis suggests that the launch of spot Ether ETFs could have a significant impact on Ethereum’s price trajectory.
