In a gloomy statement, Andrew Kang, a prominent figure in the crypto space and co-founder of crypto-focused venture capital firm Mechanism Capital, asserts that the price of Ether (ETH) could fall to as low as $2,400 after spot ETH exchange-traded funds (ETFs) start trading in the United States. This would mark a nearly 30% correction from Ether’s current price.
Spot ETH Inflows Will Be Small Relative To Bitcoin
Mechanism Capital’s Andrew Kang predicts that Ether won’t follow in Bitcoin’s footsteps. In a June 23 post on X, Kang stated that he expects spot ETH ETFs to draw in roughly 15% of the inflows that spot Bitcoin ETFs have recorded.
He observed that only $5 billion in new cash, not including funds converted from spot form, flowed into the spot Bitcoin ETFs in the first six months. Applying this data to Ethereum, the crypto VC suggests that Ether ETFs could rake in $840 million in “true” inflows during the same period.
The discrepancy shows ether has yet to find the institutional acceptance of bitcoin, and inflows into the impending ether ETFs could be tepid compared with the premier crypto. Spot BTC ETFs have attracted nearly $15 billion in investor money since their debut in mid-January.
Ether ETFs are close to becoming available in the U.S. after the Securities and Exchange Commission (SEC) greenlighted key 19b-4 filings from applicants in May. Kang said the surprise approval also means the issuers have less time to make marketing pitches toward institutional investors.
Kang added that the lack of staking for approved spot ether ETFs also makes these products less attractive compared with other platforms that offer staking yields. In other words, investors won’t be motivated to convert their spot Ether into ETF form.
Ether ETFs Are Priced In
While traders expect fireworks once the ETFs go live, Kang says the market’s initial reaction to the launch of spot ether ETFs is likely to be negative. “How much upside would an ETH ETF Provide? I would argue not much unless Ethereum develops a compelling pathway to improve its economics,” he posited, adding:
“Before the ETF launch, I expect ETH to trade from $3,000 to $3,800. After the ETF launch my expectation is $2,400 to $3,000.”
The projected price would be a substantial retreat for the asset, given Ether already touched the $4,000 mark in March when Bitcoin registered a new record high. The asset almost tapped the same level in the run-up to the SEC’s approval of Ether ETFs.
“I believe that the expectations of crypto natives are overinflated and disconnected from the true preferences of tradfi allocators,” Kang continued.
“This implies that the ETF is more than priced in.”
However, that does not mean Kang envisions Ether’s slump to zero. He thinks Bitcoin rocketing to $100,000 in late Q4/Q1 2025 could “drag ETH along” to all-time highs.
Kang highlighted that BlackRock and other prominent Wall Street giants are making huge moves in the real-world asset tokenization sector on Ethereum but is not sure how much of a positive impact that will have on the price of Ether.
As of publication time, ETH costs $3,362, a 5.3% drop on the day amid a crypto market correction.
