Andrew Kang, founder and partner at crypto-focused venture capital firm Mechanism Capital, predicts that Ether could plummet to as low as $2,400 following the launch of spot Ether exchange-traded funds (ETFs).
As of the latest data from CoinGecko, Ether (ETH) is trading at $3,410. A drop to $2,400 would represent a nearly 30% decrease from its current price.
In a June 23 post on X, Kang highlighted several factors contributing to his forecast: Ether’s relatively lower institutional interest compared to Bitcoin, limited incentives for converting spot Ether into ETFs, and underwhelming network cash flows.
“How much upside would an ETH ETF Provide? I would argue not much,” Kang remarked, concluding with his expectation: “After the ETF launch my expectation is $2,400 to $3,000.”
This projected price decline would mark a significant pullback for Ether, especially considering its peak above $4,000 in March when Bitcoin reached a new all-time high. Ether nearly approached this level again shortly before the United States Securities and Exchange Commission (SEC) approved Ether ETFs.
According to Kang, spot Ether ETFs are expected to attract approximately 15% of the flows observed by spot Bitcoin ETFs, aligning with the 10–20% range estimated by Bloomberg ETF analysts Eric Balchunas and James Seyffart.
Kang pointed out that in the first six months, only $5 billion in new funds, excluding conversions from spot form, flowed into spot Bitcoin ETFs. Extrapolating this data to Ethereum, it suggests that spot Ether ETFs could potentially attract $840 million in “true” inflows over the same timeframe.
“I believe that the expectations of crypto natives are overly inflated and disconnected from the genuine preferences of traditional finance allocators,” Kang remarked.
“This suggests that the ETF has already been fully priced into the market.”
However, not everyone shares Kang’s price forecast. Industry analyst Patrick Scott, also known as Dynamo DeFi, recently told Cointelegraph Magazine that he anticipates a similar directional movement to that seen with spot Bitcoin ETFs. Nonetheless, he does not foresee Ether’s price doubling.
Overvalued technology stock
Kang argued that while Ethereum’s potential as a decentralized financial settlement layer, a global computing platform, or a Web3 app store holds some appeal to investors, the actual data makes it a “tough sell.”
Previously, Ethereum appeared poised to generate substantial cash flows, particularly during periods of high decentralized finance activity and the non-fungible token boom. However, this momentum has not been sustained, leading Kang to suggest that Ethereum could now resemble another overpriced technology stock.
“With a 30-day annualized revenue of $1.5 billion, a price-to-sales ratio of 300x, and negative earnings or PE ratio post-inflation, how will analysts justify this valuation to institutional investors or large macro funds?”
Kang mentioned that the unexpected approval also limits the time available for issuers to market their products to institutional investors. Nevertheless, Bitwise and VanEck, two of the approved Ethereum ETF applicants, have already launched Ethereum-themed advertisements.
Additionally, Kang pointed out that excluding staking from the proposed spot Ether ETFs might discourage investors from transitioning their spot Ether holdings into ETFs.
Kang recognized that BlackRock and other financial institutions are beginning to engage in real-world asset tokenization on the Ethereum platform. However, he remains uncertain about the extent of this impact on Ether’s price.
As an executive at Mechanism Capital, Kang believes the ETH/BTC price ratio could decrease from its current level of 0.054 to as low as 0.035 within the next 12 months.
Nevertheless, Kang anticipates that a potential Bitcoin price surge to $100,000 within the next six to nine months could propel Ether to reach a new all-time high in tandem.