According to the search results, Andrew Kang, the founder and partner at crypto venture capital firm Mechanism Capital, has warned that the price of Ether (ETH) could plummet to as low as $2,400 following the launch of spot Ether exchange-traded funds (ETFs).
Kang's prediction is based on several key factors. Firstly, he believes that unlike Bitcoin, Ether attracts less institutional interest, and there are fewer incentives for investors to convert their spot Ether holdings into ETF form. He argues that the network cash flows of Ethereum have not been very impressive, making it a "hard sell" to investors when compared to its current valuation.
Kang estimates that spot Ether ETFs will only attract around 15% of the flows that spot Bitcoin ETFs have seen, which he believes is in the range of $840 million in new inflows. This is significantly lower than the $5 billion in new funds that have flowed into spot Bitcoin ETFs in the first six months. Kang believes that the expectations of crypto natives regarding Ether ETFs are "overinflated and disconnected from the true preferences of traditional finance allocators."
Furthermore, Kang points out that the removal of staking from the proposed spot Ether ETFs may also deter investors from converting their spot Ether holdings into ETF form. Staking is a key feature of the Ethereum network, and the lack of this option in the ETFs could make them less attractive to some investors.
Kang also suggests that Ethereum's pitch to investors as a decentralized financial settlement layer, a "world computer," or a Web3 app store may not be enough to justify its current valuation. He argues that with Ethereum's 30-day annualized revenue of $1.5 billion and a price-to-sales ratio of 300, it may be viewed as an "overpriced tech stock" by analysts and institutional investors.
Kang's prediction of a 30% drop in Ether's price, from the current level of around $3,410 to $2,400, is a significant downside scenario. However, it's important to note that not all experts share his pessimistic view. Patrick Scott, an industry analyst known as Dynamo DeFi, believes that Ether ETFs could see a similar directional movement to that of Bitcoin ETFs, though he doesn't expect a doubling of the price.
Additionally, asset management firm Van Eck has a more bullish outlook, predicting that spot Ether ETFs could help drive the price of Ether to $22,000 by 2030.
The launch of spot Ether ETFs undoubtedly marks an important milestone for the cryptocurrency market, and the impact on Ether's price will be closely watched by investors and analysts. While Kang's prediction of a significant price drop is a cause for concern, the future of Ethereum will ultimately depend on its ability to strengthen its economic fundamentals and continue to attract institutional and retail investors alike.
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