Fun

Ethereum could fall 30% after spot ETH ETFs launch — Crypto VC

News Feed - 2024-06-24 02:06:57

Brayden Lindrea3 hours agoEthereum could fall 30% after spot ETH ETFs launch — Crypto VCMechanism Capital’s Andrew Kang believes an Ether ETF would provide limited upside for the asset unless Ethereum “develops a compelling pathway to improve its economics.”7918 Total views15 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksEther could fall to as low as $2,400 after the launch of spot Ether exchange-traded funds (ETFs), says Andrew Kang, a founder and partner at crypto-focused venture capital firm Mechanism Capital.


According to CoinGecko, Ether (ETH) trades at $3,410 at the time of writing. A tumble to $2,400 would be a nearly 30% drop from its current price.


In a June 23 X post, Kang said, unlike Bitcoin, Ether attracts less institutional interest, there are few incentives to convert spot Ether into ETF form, and the network cash flows haven’t been very impressive.


“How much upside would an ETH ETF Provide? I would argue not much,” said Kang, adding:“After the ETF launch my expectation is $2,400 to $3,000.”


The forecast price could be a significant backtrack for the asset, given Ether already reached over $4,000 in March when Bitcoin (BTC) tipped a new all-time high. It almost reached the same level again days before the United States Securities and Exchange Commission (SEC) approved Ether ETFs.Flows relative to spot Bitcoin ETFs will be small


Kang sees spot Ether ETFs attracting 15% of the flows that spot Bitcoin ETFs have seen, which is in the 10–20% range estimated by Bloomberg ETF analysts Eric Balchunas and James Seyffart.


Kang noted that only $5 billion in new funds — excluding funds converted from spot form — flowed into the spot Bitcoin ETFs in the first six months.


Extrapolating this data to Ethereum suggests the spot Ether ETFs could take in $840 million in “true” inflows over the same timeframe.Source: Andrew Kang


“I believe that the expectations of crypto natives are overinflated and disconnected from the true preferences of tradfi allocators,” Kang said.“This implies that the ETF is more than priced in.”


Not everyone agrees with Kang’s price prediction. Industry analyst Patrick Scott (widely known as Dynamo DeFi) recently told Cointelegraph Magazine that he “expects a similar directional movement” to how the spot Bitcoin ETFs have performed. However, he doesn’t see Ether’s price doubling.


Meanwhile, asset management firm VanEck believes spot Ether ETFs can help drive Ether to $22,000 by 2030.Overpriced tech stock


Ethereum’s pitch to investors as a decentralized financial settlement layer, a world computer or Web3 app store could carry some weight, but it’s a “hard sell” when you look at the data, Kang argued.


Ethereum’s future as a cash flow “machine” looked more promising when fees were driven up by decentralized finance and the last non-fungible token cycle. However, that hasn’t continued, and now Ethereum may look like another overpriced tech stock, he said:“At $1.5B 30d annualized revenue, a 300x PS ratio, negative earnings/PE ratio after inflation, how will analysts justify this price to their daddy"s family office or their macro fund boss?”No staking a hard sell


Kang said the surprise approval also means the issuers have less time to make marketing pitches toward institutional investors. However, Bitwise and VanEck are among the few approved Ethereum ETF applicants that have released Ethereum-themed ads already.


Kang added that the removal of staking from the proposed spot Ether ETFs may also deter investors from converting their spot Ether into ETF form.


Related:Asset managers update proposals for Ether ETFs, eyeing July launch


Kang acknowledged that BlackRock and other financial institutions have started making moves in the real-world asset tokenization space on Ethereum, but he isn’t sure how much of an impact that will have on Ether’s price.


The Mechanism Capital executive thinks the ETH/BTC price ratio could slide from 0.054 at current prices to as low as 0.035 over the next 12 months.


However, Kang thinks a Bitcoin price rally to $100,000 over the next six to nine months could “drag” Ether to a new all-time high in the process.


Magazine: Polygon never set out to beat Ethereum: Anurag Arjun, X Hall of Flame# Business# Ethereum# Investments# Adoption# Data# Cryptocurrency Investment# Ethereum ETF# Bitcoin ETFAdd reaction

News Feed

White House, US Senators Call for Proper Crypto Oversight
White House, US Senators Call for Proper Crypto Oversight The White House and members of the U.S. Senate Banking Committee have called for proper cryptocurrency regulation followin
Zimbabwe Proposes Inclusion of VASPs in Its Securities Law — Move Applauded as ‘Step in Right Direction’
Zimbabwe Proposes Inclusion of VASPs in Its Securities Law — Move Applauded as "Step in Right Direction" The Zimbabwean government recently revealed its intent
HODL Waves Chart Reveals Bitcoin Holders’ Firm Grip – 42% Hasn’t Moved in 2 Years
HODL Waves Chart Reveals Bitcoin Holders’ Firm Grip - 42% Hasn’t Moved in 2 Years According to a report written by Coin Metrics analyst Jacob Franek, as of March 1, 2020, rou
New crypto users shouldn’t ‘rush into DeFi’ — Security firms
Ezra Reguerra13 hours agoNew crypto users shouldn’t ‘rush into DeFi’ — Security firmsHacken’s Luciano Ciattaglia said that new crypto users should not immediately jump into decentralized finance or decentralize
Bitcoin, Ethereum Technical Analysis: BTC Remains Below $24,000 After Falling for Fourth Consecutive Session
Bitcoin, Ethereum Technical Analysis: BTC Remains Below $24,000 After Falling for Fourth Consecutive Session Bitcoin continued to trade below $24,000 today, as the token fell for a
Bitcoin Loophole: Wanna Make $13K in 24 Hours? This Crypto Trading App Is a Scam
Bitcoin Loophole: Wanna Make $13K in 24 Hours? This Crypto Trading App Is a ScamA bitcoin investment scheme claiming to help people make over $13,000 within 24 hours has recently ga
Elon Musk Plans to Launch Alternative Phone if Apple, Google Boot Twitter off Their App Stores
Elon Musk Plans to Launch Alternative Phone if Apple, Google Boot Twitter off Their App Stores Tesla CEO and Twitter boss Elon Musk says he will make an alternative phone if Apple
ZachXBT criticizes Irene Zhao’s new memecoin amid past failures
Amaka Nwaokocha12 hours agoZachXBT criticizes Irene Zhao’s new memecoin amid past failuresThe crypto community remains divided as Zhao attempted to clarify her past actions and emphasize her commitment to transparency
The Opendao Gives Xmas Airdrop to Opensea Users
The Opendao Gives Xmas Airdrop to Opensea Users New decentralized organization Opendao gave users of Opensea, one of the biggest NFT marketplaces by trading volume, a gift on Chris
US Startup Raising $10 Million for Private Jets You Can Lease With Crypto
Jet Token is raising up to $10 million in a Regulation A offering for its ethereum-powered private jet leasing marketplace where travelers can pay for charters using ERC20 tokens. P
Physical version of gold-backed token replaces Zimbabwe dollar
Derek Andersen3 hours agoPhysical version of gold-backed token replaces Zimbabwe dollarThe country has struggled with an unstable currency for years, but now it will have one backed by reserves three times larger than it
Bit2Me Debit Card Launch Gives Users up to 9% Cashback on All Purchases
Bit2Me Debit Card Launch Gives Users up to 9% Cashback on All Purchases sponsored Bit2Me, the biggest Spanish exchange, and the first company to be recognized as a virtual service p