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Crypto: A 30% Plunge for Ethereum with the Arrival of Spot ETFs

Mon 24 Jun 2024 ▪ 4 min of reading ▪ by Evans S.
Getting informed Event

The crypto universe is buzzing with the announcement of the imminent launch of spot Ethereum (ETH) ETFs. One of the most influential players in the sector, Andrew Kang, founder of Mechanism Capital, has recently shared his predictions regarding the impact of this news on the price of Ether. According to him, Ethereum could undergo a drastic drop of 30%, sparking strong reactions and intense speculation among investors.

Ethereum crypto

Predictions for the fall of ETH crypto

Andrew Kang raised the alarm in an article published on June 23, where he predicts a significant decrease in the price of ETH crypto following the launch of spot ETH ETFs.

Currently, Ether is trading around 3,410 dollars, but Kang anticipates a drop to 2,400 dollars, a fall of about 30%. Unlike Bitcoin, the ETH crypto does not benefit from the same level of institutional interest, which could limit the appeal of ETFs for this asset.

Indeed, the Mechanism Capital expert highlights that the cash flows generated by the Ethereum network have not been impressive recently, and the incentives to convert ETH crypto into ETFs remain weak.

This prediction contrasts sharply with previous peaks achieved by Ethereum, which flirted with 4,000 dollars last March, during the last Bitcoin historic summit.

Comparison with Bitcoin ETFs

One of the main reasons advanced by Kang to explain this pessimistic prediction is the comparison with spot Bitcoin ETFs.

According to him, spot Ether ETFs will attract only 15% of the flows observed for spot Bitcoin ETFs, which is within the 10 to 20% range estimated by Bloomberg ETF analysts.

In practice, this means that Ethereum ETFs could receive around 840 million dollars in new capital inflows over the same period where Bitcoin ETFs attracted 5 billion dollars.

This low institutional attraction for Ethereum is exacerbated by a negative perception of its economic fundamentals.

Kang asserts that the expectations of crypto natives are often disconnected from the preferences of institutional investors, which reinforces the idea that the Ethereum ETF might not be as popular as some hope.

Divergent perspectives and the future of Ethereum

Not all experts share Kang’s pessimistic view. For example, Patrick Scott, also known as Dynamo DeFi, believes that Ethereum ETFs could follow a trajectory similar to that of Bitcoin ETFs, though he does not predict a doubling of the ETH crypto price.

Moreover, asset management company Van Eck predicts that spot Ether ETFs could help bring Ether to 22,000 dollars by 2030.

Despite these divergent perspectives, it is undeniable that the future of Ethereum will depend on its ability to evolve and strengthen its economic fundamentals.

Presenting Ethereum as a decentralized financial settlement layer and platform for Web3 applications could attract some investors, but current data shows a less promising picture.

The arrival of spot Ethereum ETFs marks an important turning point for the crypto market. While some experts, like Andrew Kang, predict a 30% drop in the price of Ether, others see these new financial products as an opportunity for Ethereum to strengthen its position in the market. In the meantime, some investors are wondering whether it is better to buy Nvidia shares or bitcoin.

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Evans S. avatar
Evans S.

Fasciné par le bitcoin depuis 2017, Evariste n'a cessé de se documenter sur le sujet. Si son premier intérêt s'est porté sur le trading, il essaie désormais activement d’appréhender toutes les avancées centrées sur les cryptomonnaies. En tant que rédacteur, il aspire à fournir en permanence un travail de haute qualité qui reflète l'état du secteur dans son ensemble.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.