Ether (ETH) Price Might Crash 30% if Spot Ethereum ETF is Approved

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As a researcher with a background in cryptocurrencies and blockchain technology, I find Andrew Kang’s perspective on the potential impact of ETH ETFs on Ether (ETH) prices intriguing. Unlike many investors who are bullish about the approval of ETH ETFs pushing prices higher, Kang presents a contrarian view.

If approved by the SEC, the value of Ethereum‘s native token, Ether (ETH), is projected to experience a significant drop of nearly 30%.

Andrew Kang, co-founder and partner at Mechanism Capital, which specializes in venture capital investments in cryptocurrencies and blockchain technology, has issued a bearish outlook on Ethereum (ETH), going against the optimistic views of many investors. Despite widespread belief that the approval of ETH exchange-traded funds (ETFs) would lead to price increases, Kang holds a different perspective.

On social media platform X, which was formerly recognized as Twitter, Kang shared his perspective in a post. He expressed that the approval of Bitcoin spot ETFs has significantly attracted numerous new investors to include bitcoin in their investment portfolios. However, Kang raised doubts about the influence of Ethereum ETFs, stating that the outcome is not as straightforward. He provided several reasons for his anticipation.

As a crypto investor, I’ve observed that since the bottom of the cycle, Bitcoin has generated a return of approximately 4x, and Ethereum has delivered a comparable 4x increase. However, if we consider an ETH ETF based on these figures alone, I believe the upside potential would be limited, unless Ethereum manages to establish a persuasive roadmap for enhancing its economic fundamentals.

The executive from Mechanism Capital expressed his belief that there’s decreased motivation for investors to transform their Ethereum (ETH) into ETF form due to reduced institutional interest and unimpressive network cash flows compared to Bitcoin (BTC). Consequently, he forecasted a potential price decrease of approximately 30% for Ethereum.

Kang pointed out that the surge in Bitcoin’s price from $40,000 to $65,000 wasn’t solely due to approved BTC ETFs, but also because of an influx of buyers in the spot market. He emphasized that Bitcoin has gained global acceptance as a significant investment asset and boasts numerous structural investors such as MicroStrategy led by Michael Saylor, Tether, high net worth individuals (HNWI), and more. Although Ethereum has some structural investors, Kang maintains that their number is significantly smaller compared to Bitcoin.

“Those deeply involved in cryptocurrencies naturally hold significant influence and preference towards Ethereum. However, among non-crypto native investors, Ethereum holds far less importance as a major investment allocation.” (Kang remarked)

Ether (ETH) at $3,000-$3,800

Kang holds the opinion that Ether (ETH) will likely transact within the price band of $3,000 to $3,800, with Bitcoin’s upward trend pulling ETH along to some degree. However, following Ethereum ETF approval, this digital asset may trade between $2,400 and $3,000. If Bitcoin reaches $100,000 by late 2025, there’s a possibility that ETH will hit new price peaks as well.

As an analyst, I’d rephrase Kang’s statement as follows: I share his optimism regarding the future developments in the blockchain and tokenized asset realm, with Blackrock/Fink being a significant player. However, I remain uncertain about the specific impact on Ethereum (ETH) and when we can expect to see tangible results from these efforts.

The Securities and Exchange Commission (SEC) has given its green light to 19b-4 applications for Ethereum (ETH) spot exchange-traded funds (ETFs), while the approval process is still underway for their S-1 filings.

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2024-06-24 10:16