Andrew Kang, a founder, and partner at Mechanism Capital, predicted that Ethereum could drop its price to $2400 after the launch of Spot Ethereum ETFs. As per the data taken from CoinMarketCap, ETH is changing hands at $3,370, as anticipated by Kang, if it drops to $2400, the drop ratio is almost 30% from the current price.
According to post on X on June 23, Kang stated that Ethereum attracts fewer institutional investors than Bitcoin. There are minimal incentives to convert spot Ether into ETF form, and the network’s cash flows are not very impressive.
Kang said:
How much upside would an ETH ETF Provide? I would argue not much. After the ETF launch my expectation is $2,400 to $3,000.
The projected price decline would mark a significant setback for Ether, which surpassed $4,000 in March when Bitcoin hit a new all-time high. It nearly reached that level again just days before the U.S. SEC approved Ether ETFs.
Spot Bitcoin ETF Flows Expected to Be Minimal
Kang anticipates that the Ethereum ETF can attract 15% of the funds collected by Bitcoin. His statement aligns with the Bloomberg analysts Eric Balchunas and James Seyffart, who spotted that it could only attract funds between 10% – 20%.
Mechanism Capital founder spotted that, In the first six months, Bitcoin Gathered $5 billion of funds excluding the conversion of spot Bitcoin, while Ethereum ETF only attracted $840 million of funds during the same timeframe.
He said:
“I believe that the expectations of crypto natives are overinflated and disconnected from the true preferences of tradfi allocators.
This implies that the ETF is more than priced in.
Along with the Kang price prediction, industry analyst Patrick Scott stated that he “expects a similar directional movement” to how to spot Bitcoin ETF performed. He does not doubt the price of Ethereum.
VanEck also stated that Ethereum ETF would help ETH to reach the mark of $22,000 by 2030.
Overvalued Tech Stock
Kang argued that while Ethereum’s appeal to investors as a decentralized financial settlement layer, world computer, or Web3 app store might seem compelling, the data makes it a “hard sell.”
He further stated that Ethereum’s potential as a cash flow “machine” appeared brighter when decentralized finance and the last non-fungible token (NFT) cycle drove up fees. However, this trend hasn’t continued, and now Ethereum may look like just another overpriced tech stock.
“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?”
The Challenge of Staking Adoption in the Crypto Market
According to Andrew, the surprise approval of Ethereum ETF did not provide them enough time for marketing. He praised the efforts of VanEck and Bitwise, whose ETF got approved, and they started running ads before the approval.
Excluding staking from the proposed spot Ether ETFs could dissuade investors from converting their spot Ether into ETFs, Kang added.
Kang recognized that BlackRock and other financial institutions have initiated activities in the real-world asset tokenization sector on Ethereum. However, he expressed uncertainty regarding how significantly this will affect Ether’s price.
The executive from Mechanism Capital believes the ETH/BTC price ratio, currently at 0.054, could decrease to as low as 0.035 within the next 12 months.
Kang predicted that the Bitcoin price surge to $100K in the next six to nine months will give a new high to the price of Ethereum.
