In a recent statement, Andrew Kang, co-founder of Mechanism Capital, predicts that the price of Ether (ETH) could drop to $2,400 after spot ETH exchange-traded funds (ETFs) start trading in the US. This would represent a nearly 30% decrease from its current value. Kang anticipates that Ether won’t see the same level of inflows as Bitcoin once the ETFs are available, estimating only $840 million in new cash inflows for ETH compared to $15 billion for BTC.
The approval of Ether ETFs by the SEC in May has paved the way for their availability in the US. However, Kang believes that the issuers may struggle to attract institutional investors due to the lack of marketing time and the absence of staking options for these products. This could result in tepid inflows into the Ether ETFs compared to Bitcoin, which has seen significant investor interest since the launch of its spot ETFs.
While many traders are anticipating positive outcomes once the Ether ETFs are live, Kang suggests that the initial market reaction may be negative. He expects ETH to trade between $3,000 and $3,800 before the ETF launch, dropping to $2,400 to $3,000 afterward. Despite the potential decline in price, Kang does not foresee Ether becoming worthless, especially if Bitcoin reaches $100,000 by late 2024 or early 2025.
Kang points out that Ethereum is gaining traction among Wall Street firms for real-world asset tokenization. However, he remains unsure about the impact this will have on Ether’s price. Currently, ETH is priced at $3,362, reflecting a 5.3% decrease in value amid a broader correction in the crypto market. Kang believes that the expectations of crypto natives regarding the ETF launch may be inflated, leading to a potential correction in Ether’s price post-ETF availability.
In conclusion, Kang’s pessimistic outlook on Ether’s price post-ETF launch highlights the uncertainty surrounding institutional interest in the cryptocurrency. While he anticipates a drop in value, he does not discount the potential for Ether to reach new highs in the future, especially if Bitcoin continues its upward trajectory. The dynamics of the cryptocurrency market remain complex, and the impact of ETFs on Ether’s price is yet to be fully realized. Investors and traders will be closely monitoring the developments in the market to gauge the true impact of ETFs on Ether’s value.