Andrew Kang, co-founder of venture capital firm Mechanism, wrote an article pointing out that the Ethereum ETF has limited upside, and that in the long run Ethereum is more like a declining Intel than Huida or Amazon.

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Ethereum ETF’s upside is limited

1. ETH has followed the rise of BTC

Andrew Kang mentioned that when he submitted a Bitcoin ETF application at BlackRock, he was publicly optimistic about the surge in Bitcoin. Since then, Bitcoin has risen 2.6 times and ETH has risen approximately 2.1 times.

Judging from the bottom of the cycle, both BTC and ETH have increased approximately 4 times. So even if the Ethereum ETF is successfully listed, will there be room for growth?

He believes that unless Ethereum’s fundamentals improve significantly, he is not optimistic about subsequent gains.

2. Bitcoin spot ETF net inflows are exaggerated

He went on to point out that the asset management scale of Bitcoin ETF has reached 50 billion U.S. dollars, and the net inflow since its listing has been 14.5 billion U.S. dollars. However, this is not a real capital inflow. It also needs to deduct futures arbitrage transactions, spot rollovers, etc. Neutral capital inflows.

He estimated that approximately US$450 million in net flows were arbitrage transactions, and large holders such as BlockOne also converted a large amount of BTC spot into ETFs, amounting to approximately US$5 billion. This concludes that the real net inflow of Bitcoin ETFs is only US$5 billion. .

3. ETH traffic will only be 15% of BTC

Bloomberg ETF analyst Eric Balchunas once estimated that ETH flow may only be 10% of BTC. Judging from the second point of inference, the book net inflow of the ETH spot ETF six months after its listing was approximately US$1.5 billion, and the real net inflow was approximately US$1.5 billion. $500 million.

Andrew Kang predicts that the real net inflow will fall around 15% of BTC, and the encryption field is relatively familiar with ETH. The expectations for Ethereum ETF may be higher than the expectations of traditional financial retail investors. Compared with BTC, the public is less interested in ETH. ETH may not be footing the bill.

He believes that after the Ethereum ETF launches, the ETF will fall to $2,400 to $3,000.

(Elderly people don’t understand “Ethereum”, does the ETH ETF lack traditional market selling points?)

Ethereum is like Intel, not NVDA or AMZN

After analyzing "Ethereum ETF's limited upside", Andrew Kang further criticized Ethereum's price trend and fundamentals.

Ethereum is generally regarded as a technology stock, and he believes that the trend of ETH is quite similar to that of Intel and Cisco (Cisco), which have been declining for a long time:

Intel has had several bubbles in the past as issues such as limited growth, slowing new innovation, and competitors grabbing market share become more apparent, which affects the amount of money investors are willing to invest. Tell me, how do you market it to investors? A company worth $420 billion (market cap of Ethereum), with a price-to-earnings ratio of 200 times and negative revenue growth? Cryptocurrency idiots will foot the bill, but given the current fundamentals, it is simply a fantasy to believe that traditional finance will inject a certain amount of funds.

Intel monthly line ETH / BTC monthly activity on the chain is being transferred to major public chains

Andrew Kang concluded:

It is wishful thinking to believe that Ethereum is on the path to becoming NVDA or AMZN. These companies all have convincing year-over-year growth plans and historical revenue growth, while Ethereum is just the opposite. NFTs are dying, on-chain transactions are being transferred to other chains, and on-chain fees are on a downward trend. This is true in every cycle. Typical bubble highs that occur.

This article Andrew Kang: Ethereum is not Huida, and its poor fundamentals are more like Intel. It appeared first on Chain News ABMedia.