Ethereum could fall 30% after spotting ETH ETFs launch

According to Andrew Kang, the founder and partner of crypto-focused venture capital company Mechanism Capital, Ether might plummet to as low as $2,400 following the debut of spot Ether ETFs.As of this writing, Ether is trading at $3,410, according to CoinGecko. Its present price would decrease by about 30% if it fell to $2,400.

According to Kang, in a June 23 X post, there are fewer incentives to convert spot Ether into ETF form, the network cash flows haven’t been all that impressive, and Ether draws less institutional attention than Bitcoin. 

The projected price may represent a substantial retreat for the cryptocurrency, considering that Ether hit a record high of almost $4,000 in March when Bitcoin hit a new peak. It nearly hit the same mark once more a few days before Ether ETFs approved by the US Securities and Exchange Commission.

Inflows & Price Prediction

According to Kang, spot Ether ETFs are drawing 15% of the flows noticed by spot Bitcoin ETFs, which is within the predicted range of 10% to 20% as reported by Bloomberg ETF analysts Eric Balchunas and James Seyffart.

In the first half of the year, Kang observed, just $5 billion in fresh capital (not including funds converted from spot form) entered the spot Bitcoin ETFs.Based on transferring this data to Ethereum, Ether ETFs may see “real” inflows of $840 million throughout the same period of time.

Not everybody agrees with Kang’s estimate of the price. According to a recent interview with Cointelegraph Magazine, industry analyst Patrick Scott, also known as Dynamo DeFi, “expects a similar directional movement” to how spot Bitcoin ETFs have behaved. He does not, however, predict Ether’s price doubling.Spot Ether ETFs, according to asset management company VanEck, could propel Ether over $22,000 by 2030.

Ethereum may have some validity in its pitch to investors as a Web3 app store, a global computer, or a decentralised financial settlement layer, but Kang claimed that the data makes the argument a “hard sell.”

He said that Ethereum appeared to have a brighter future as a cash flow “machine” as fees increased due to decentralised financing and the final non-fungible token cycle. But that hasn’t held, and at this point, Ethereum would appear to be just another inflated tech stock.

Kang’s View on Ethereum ETFs

According to Kang, the issuers will have less time to pitch their products to institutional investors as a result of the unexpected approval. Nevertheless, Bitwise and VanEck are two of the few authorised candidates for Ethereum ETFs that have already produced advertisements with an Ethereum theme. Kang went on to say that investors might be discouraged from transferring their spot Ether into ETF form if staking is eliminated from the planned spot Ether ETFs.

Kang conceded that financial organisations such as BlackRock have begun to participate in the Ethereum real asset tokenization arena. He is unsure of the exact effect that will have on Ether’s price, though.

The CEO at Mechanism Capital believes that during the course of the next year, the ETH/BTC price ratio may drop from its present level of 0.054 to as low as 0.035.But according to Kang, a surge in Bitcoin prices above $100,000 within the course of the next six to nine months may “drag” Ether to a historical high.