Andrew Kang, founder and partner at crypto-focused venture capital firm Mechanism Capital, said ETH could fall to as low as $2,400 following the launch of spot Ethereum ETFs.
According to CoinGecko, ETH is currently trading at $3,379. Thus, the price decreased to $2,400, which is nearly 30% lower than the current price.
ETH 4-hour price chart | Source: TradingView
In a post on X on June 23, Kang saidunlike Bitcoin, ETH attracts less institutional interest, there is little incentive to convert spot Ethereum into an ETF, and the flow of funds through the network is not very impressive.
“How much will the Ethereum ETF yield? I don’t argue much. After the ETF launches, my expectation is between $2,400 and $3,000,” Kang said.
The forecast price could be a significant setback for the asset, given that ETH reached over $4,000 in March when Bitcoin hit a new all-time high. It almost reached the same level again a few days ago when the US Securities and Exchange Commission (SEC) approved the Ethereum ETF.
The cash flows associated with the spot Bitcoin ETF will be small
Kang sees Ethereum spot ETFs attracting 15% of the inflows that spot Bitcoin ETFs have seen – well within the 10-20% range estimated by Bloomberg ETF analysts Eric Balchunas and James Seyffart.
Kang noted that only $5 billion in new money (excluding amounts converted from spot) flowed into spot Bitcoin ETFs in the first six months.
Extrapolating this data to Ethereum shows that spot Ethereum ETFs raked in $840 million in “real” inflows over the same time frame.
Kang said:
“I believe the expectations of crypto adopters are overblown and disconnected from the true preferences of those allocating to TradFi. This implies that the ETF is overvalued.”
Not everyone agrees with Kang’s price prediction. Industry analyst Patrick Scott (widely known as Dynamo DeFi) recently revealed to “expect similar directional movement” to how spot Bitcoin ETFs have performed. However, according to him, the price of ETH will not double.
Meanwhile, asset management firm Van Eck believes a spot Ethereum ETF could help take ETH to $22,000 by 2030.
Tech stocks are overvalued
Kang argues that Ethereum’s pitch to investors as a decentralized financial payments layer, a world computer or a Web3 app store may be true to a certain extent, but will find it “difficult to ” if looking at the data.
Ethereum’s future as a cash flow machine looks more promising as fees are driven by the DeFi and NFT cycles. However, that has not continued and Ethereum may now look like another overvalued tech stock, he said:
“With $1.5B 30-day annualized revenue, 300x PS ratio, negative earnings/PE ratio after inflation, how would analysts justify this price to the company? their father’s family or their macro fund boss?
Are not Staking causes disadvantages
Kang said the surprise approval also means issuers have less time to do marketing to institutional investors, although Bitwise and VanEck are among the few Ethereum ETF candidates. Approved released Ethereum-themed ads.
Kang added that removing staking from proposed Ethereum spot ETFs could also discourage investors from converting their spot Ethereum into ETF form.
Kang admitted BlackRock and other financial institutions have begun making moves in the space of tokenizing real-world assets on Ethereum, however, he is not sure what impact that will have on the price of ETH.
The Mechanism Capital operator believes that the ETH/BTC price ratio could fall from the current 0.054 to as low as 0.035 in the next 12 months.
However, Kang believes that a rise in Bitcoin price to $100,000 in the next 6 to 9 months could “pull” ETH to new all-time highs in the process.
You can see ETH price here.
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According to Cointelegraph
