By
Godfrey Benjamin
June 28th, 2024
Andrew Kang said that there will be less demand for ETH ETFs since Ether (ETH) attracts lesser institutional interest than Bitcoin (BTC).
Ether (ETH price data), the native token of the Ethereum blockchain, is predicted to crash almost 30% if the United States Securities and Exchange Commission (SEC) approves the trading of spot ETH exchange-traded funds (ETFs) in the country.
Andrew Kang, a founder and partner at Mechanism Capital, a venture capital firm focused on cryptocurrencies and the blockchain sector, made a bearish prediction for Ether (ETH), contrary to the sentiments of the investors. It is widely believed that the approval of ETH ETFs would push prices higher, but Kang says otherwise.
In a post on social media platform X (previously known as Twitter), Kang stated that while the approval of spot Bitcoin ETFs “opened the door for many new buyers to make bitcoin allocations within their portfolio”, the impact of ETH ETFs “is a lot less clear-cut”. Kang pointed out several reasons for his prediction as well.
“From the cycle bottom, BTC has returned 4.0x and ETH has returned a similar 4.0x. So how much upside would an ETH ETF Provide? I would argue not much unless Ethereum develops a compelling pathway to improve its economics,” Kang said.
The Mechanism Capital executive said that there is less incentive for investors to convert their ETH into ETF format, Ether (ETH) attracts lesser institutional interest than Bitcoin (BTC), and the network cash flows are not impressive, while supporting his prediction of a 30% decline in price.
Kang noted that it wasn’t the approval of spot BTC ETFs that pushed BTC price from $40,000 to $65,000, but there was an increase in buyers in the spot market as well. He said that Bitcoin is an asset that “has truly become validated globally as a key portfolio asset and has many structural accumulators”, giving examples of Michael Saylor’s MicroStrategy, stablecoin issuer Tether, HNWI retail, and others. While ETH also has some structural accumulators, Kang believes that the magnitude is quite lesser than BTC.
“It is natural that those deep in the crypto space have a relatively high mind share and buy in of Ethereum. In reality, it has much less buy in as a key portfolio allocation for many large groups of non crypto native capital,” Kang added.
Ether (ETH) at $3,000-$3,800
Kang believes that Ether (ETH) will trade in the range of $3,000 to $3,800, and as Bitcoin moves up, it will drag ETH with it to a certain extent. However, he expects that post-ETH ETF approval, the digital asset will trade between $2,400 and $3,000, and if BTC makes a move towards $100,000 in late 2025, there is a chance that ETH will also witness new highs.
Kang also noted that in the very long run, “there are developments to be hopeful about, and you have to believe that Blackrock/Fink are doing a lot of work to put some financial rails on blockchains & tokenized more assets.” But he is uncertain about how much value this “translates into for ETH and on what timeline.”
Recently, the SEC approved 19b-4 filings for spot ETH ETFs, but the S-1 filings have yet to be approved for the same.