Key Points
- Ethereum’s native token, Ether (ETH), could potentially drop by nearly 30% if the US SEC approves spot ETH ETFs.
- Andrew Kang, a founder at Mechanism Capital, predicts a bearish outcome for ETH, contradicting common investor sentiment.
Andrew Kang, co-founder of Mechanism Capital, has forecasted a potential 30% drop in the price of Ethereum (ETH) if the US Securities and Exchange Commission (SEC) greenlights spot ETH exchange-traded funds (ETFs) in the country. This prediction contradicts the widespread belief that the approval of ETH ETFs would lead to a price increase.
Kang’s Contrarian View on ETH’s Future
In a social media post on platform X, Kang argued that the impact of ETH ETFs is less clear-cut than that of Bitcoin ETFs. He cited several reasons for his prediction, including the similar returns of BTC and ETH from the cycle bottom, and the lack of a compelling pathway for Ethereum to improve its economics.
He also argued that there is less incentive for investors to convert their ETH into ETF format, and that Ethereum attracts less institutional interest than Bitcoin (BTC). Citing unimpressive network cash flows, Kang supported his prediction of a 30% decline in price.
Bitcoin vs Ethereum: A Comparative Analysis
Kang also noted that it wasn’t the approval of spot BTC ETFs that pushed BTC price from $40,000 to $65,000, but an increase in buyers in the spot market. He stated that Bitcoin has become a globally validated key portfolio asset with many structural accumulators, such as Michael Saylor’s MicroStrategy, stablecoin issuer Tether, HNWI retail, and others. Kang believes that while Ethereum also has some structural accumulators, their magnitude is significantly less than Bitcoin’s.
Kang expects that Ether (ETH) will trade in the range of $3,000 to $3,800, and that Bitcoin’s upward movement will drag ETH to some extent. However, he predicts that post-ETH ETF approval, the digital asset will trade between $2,400 and $3,000. If Bitcoin makes a move towards $100,000 in late 2025, Kang believes there’s a chance that Ethereum will also witness new highs.
He also mentioned that there are long-term developments to be hopeful about, such as efforts by Blackrock/Fink to put financial rails on blockchains and tokenize more assets. However, he’s uncertain about how much value this translates into for Ethereum and over what timeline.
The SEC has recently approved 19b-4 filings for spot ETH ETFs, but the S-1 filings have yet to be approved.
