Analyst Warns on Spot ETH ETF Launch

Market reaction and sentiment towards Ethereum spot ETFs is somewhat muted compared to when the Bitcoin products were launched earlier this year.

These are the findings of crypto entrepreneur and investor Andrew Kang, who published a lengthy analysis of the impact of Ethereum ETFs on X on June 23.

Bitcoin ETFs opened the door for many new buyers to make BTC allocations in their wallets. However, “the impact of ETH ETFs is much less clear,” he said.

ETH price could close

Kang estimates that Ethereum ETF flows will be about 10% to 15% of Bitcoin ETF flows, which will amount to roughly $500 to $1.5 billion in actual net purchases within six months.

It was reported last week that Fidelity will seed its Ethereum ETF with $4.7 million, so the buying has already begun. In March, Standard Chartered predicted that inflows would reach $45 billion in the first 12 months of Ethereum ETF trading.

However, Kang offered several reasons why the impact of an Ethereum ETF is expected to be less significant than that of Bitcoin.

Ethereum is considered more of a technology asset than a macro asset like BTC. There’s also less institutional interest and buying pressure for it, as its current valuation metrics, such as price-to-earnings, make it harder to justify to traditional financial allocators, he said.

“It’s natural for those in the crypto space to have a relatively high mind share and purchase of Ethereum. It actually has far less participation as a key portfolio allocation for many large non-crypto native capital pools” .

https://t.co/On2KWjAlLx

— Andrew Kang (@Rewkang) June 23, 2024

Also, the positioning of Ethereum before the launch of any ETF is different from that of Bitcoin, as the asset has already risen 4x from its lows, while BTC rose 2.75x before the launch of its ETF , added.

Therefore, Kang expects ETH to trade between $3,000 and $3,800 before the ETF launch, but potentially fall between $2,400 and $3,000 after the launch. A dump at the lower estimate would wipe out 30% of the asset’s current value.

However, if BTC rises to $100,000 by the end of this year or early next year, it could drag Ethereum and altcoins down with it, he predicted.

Kang’s bearish Ethereum stance didn’t end there. Expect a continued downtrend in the ETH/BTC ratio over the next year, hovering between 0.035 and 0.06.

ETH prices drop below $3,400

Meanwhile, the price of ETH fell in the last 24 hours alongside the broader cryptocurrency market, which remains full of uncertainty.

Source: TradingView

At the time of writing, Ethereum is found to be trading below $3,400, down 3.4% on the day and 5.3% on the week.

The rest of the market is also down. Bitcoin fell below $63,000 with a loss of 2.5% in the last day, while BNB and Solana lost 3% and 6.2%, respectively.

Not everything is bearish on Ethereum

The only bullish prediction was that large asset managers like BlackRock could use Ethereum to tokenize real-world assets, but “the value that this translates to for ETH and in what timeline is uncertain,” he concluded.

Additionally, ConsenSys said last week that the US Securities and Exchange Commission was closing its investigation into the Ethereum Foundation.

This could cement ETH’s status as a commodity rather than a security, which is also very bullish for the asset and other altcoins.

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