Cryptocurrency venture capital firm Mechanism Capital’s founder and partner Andrew Kang believes that the impact of an Ethereum spot ETF on the price of Ether (ETH) will not be as significant as that of a Bitcoin spot ETF. He predicts that before the launch of an Ethereum ETF, the trading price of ETH will range between $3,000 and $3,800, and after the ETF is introduced, Ether may drop to between $2,400 and $3,000.
In an article released on Sunday (23rd), Kang stated that unlike Bitcoin (BTC), Ethereum attracts less institutional interest, making the conversion of Ethereum spot into an ETF less compelling, and the network’s cash flow is also not ideal. He wrote:
Andrew Kang believes that the capital flow attracted by an Ethereum spot ETF is only 15% of the flow seen by a Bitcoin spot ETF, which is very close to the 10% to 20% estimated by Bloomberg ETF analysts Eric Balchunas and James Seyffart.
Kang pointed out that in the first six months after the launch of a Bitcoin spot ETF, only $5 billion of new capital (excluding funds converted from spot form) flowed in. Applying this data to Ethereum, an Ethereum spot ETF is estimated to attract $8.4 billion of “real” capital inflow within the same time frame.
Furthermore, Kang predicts that the price of ETH against BTC will continue to decline, with the ratio expected to range between 0.035 and 0.06 over the next year. He wrote:
According to TradingView data, the price of ETH against BTC has been on a continuous decline since September 2022, hitting a new low in May of this year. Recently, the price of ETH/BTC seems to show signs of forming a bottom, and whether it can break the downtrend remains to be seen.
ETH/BTC price trend over the past three years (Source: TradingView)