The aforementioned number denotes an almost 30% decrease from Ether’s current market value of $3,410. Given that Bitcoin reached a new all-time high in March, when it reached a high of over $4,00, this prediction indicates a big possible decrease. A few days prior to Ether ETFs being approved by the US SEC, Ether had also touched this level again.
Compared to Ether’s current trading price of $3,410, this marketed value indicates a nearly 30% decrease. Given that the price of Bitcoin reached an all-time high of nearly $4,000 in March, this prognosis indicates a big potential fall. Not too many days before Ether ETFs were allowed by the US SEC, Ether had also retested this level.
Examination of Spot ETF’s Effect on Ethereum’s Price
Kang cites a number of important reasons for his pessimistic view. First off, institutional interest in Ethereum has not been as high as that of Bitcoin.
Second, there aren’t many incentives for investors to switch from spot Ether to the ETF format. Its total valuation has also been impacted by the network’s lackluster cash flows.
His doubt about the advantages of ETH ETFs is evident in his query about how much market movement they would cause. After the ETFs are introduced, he continued, Ethereum’s price range will be between $2,400 and $3,000.
Additionally, Kang’s comparison study indicates that spot Ether ETFs may only be able to recoup 15% of the inflows that spot Bitcoin ETFs record.
ETF flows for Bitcoin have been between 10 and 20 percent, according to James Seyffart and Eric Balchunas of Bloomberg ETF analysts. Excluding converted funds, spot Bitcoin ETFs raised $5 billion in new capital in their first half-year of operation.
Kang predicts that Ether ETFs might see “true” inflows of about $840 million over a comparable time frame if this pattern holds true for Ethereum. He feels that traditional finance allocators’ true preferences are not in line with the lofty expectations of the crypto community.
Not all analysts, though, agree with Kang’s gloomy assessment. According to a recent interview, Patrick Scott, also known as Dynamo DeFi, predicted that Ether’s price would move in a manner akin to that of spot Bitcoin ETFs. He did concede, though, that Ether might not double in value.
Conversely, spot Ether ETFs may contribute to Ethereum’s price rising to $22,000 by 2030, according to asset manager VanEck.
Kang also talks about the investment appeal of Ethereum, pointing out that it might be used as a Web3 app store, a decentralized financial settlement layer, or a global computer. But he contends that the available facts makes it an unappealing investment option.
It was also mentioned by him that Ethereum appeared to have more potential as a cash flow while fees were being increased by DeFi and NFTs. His comparison of Ethereum to an overvalued tech stock came about since this tendency has not persisted.
Spot Ether ETFs May Not Fly
Kang also questioned the existing valuation measures, which include a 300x price-to-sales ratio, a 30-day annualized revenue of $1.5 billion, and an after-inflation negative earnings/price-to-earn ratio. He wonders how analysts defend this price to the head of their family office or macro fund.
Issuers now have less time to market these ETFs to institutional investors because of the unexpected nature of the approval, according to Kang. While a few companies, including as VanEck and Bitwise, have already released commercials using Ethereum, the short notice may affect institutional adoption more widely.
Kang also stated that the exclusion of staking from the planned spot ETH ETFs could be a constraint. The lack of staking may discourage investors from turning their spot Ether holdings into ETFs.
While Kang acknowledges that BlackRock and others have begun tokenization plans for Ethereum, he doubts that these initiatives will have a substantial impact on ETH’s price.
