Potential Drop in Ether to 24003000 After the Launch of Ether Spot ETF by Mechanism Capital Partner

Potential Drop in Ether to 24003000 After the Launch of Ether Spot ETF by Mechanism Capital Partner

Potential Drop in Ether to 24003000 After the Launch of Ether Spot ETF by Mechanism Capital Partner

Andrew Kang, the founder and partner of cryptocurrency venture capital firm Mechanism Capital, believes that the impact of an Ethereum spot ETF on the price of Ether (ETH) will not be as significant as that of a Bitcoin spot ETF. He predicts that prior to the launch of an Ethereum ETF, the trading price of Ether will range between $3,000 and $3,800, and after the launch, it may drop to $2,400 to $3,000.

In an article published on Sunday, Kang stated that unlike Bitcoin, Ethereum attracts less institutional interest, and there is little motivation to convert Ethereum spot into ETF form, given the less ideal network cash flow. He wrote:

Andrew Kang believes that the capital inflow attracted by an Ethereum spot ETF is about 15% of the inflow seen by a Bitcoin spot ETF, which is not far off from the estimate of 10% to 20% made by Bloomberg ETF analysts Eric Balchunas and James Seyffart.

Kang pointed out that within the first six months after the launch of a Bitcoin spot ETF, only $5 billion of new capital (excluding funds converted from spot form) flowed in. Applying this data to Ethereum, an estimated “real” capital inflow of $840 million may occur within the same time frame for an Ethereum spot ETF.

Furthermore, Kang predicts that the price of ETH against BTC will continue to decline and remain within a range of 0.035 to 0.06 over the next year. He wrote:

According to TradingView data, the price of ETH against BTC has been continuously declining since September 2022, reaching a new low in May of this year. Recently, there have been signs of a bottom formation in the ETH/BTC price, but whether it can break the downtrend remains to be seen.

Price trend of ETH/BTC over the past three years (Source: TradingView)