Mechanism Capital’s Andrew Kang believes that an Ether ETF would offer limited benefits for the asset unless Ethereum can significantly improve its economic model.
Kang, a founder and partner at the crypto-focused venture capital firm Mechanism Capital, predicts that Ether could drop to $2,400 after the introduction of spot Ether exchange-traded funds (ETFs). According to CoinGecko, Ether is currently trading at $3,410, so a fall to $2,400 would represent nearly a 30% decline from its current price.
In a June 23 post on X, Kang mentioned that, unlike Bitcoin, Ether attracts less institutional interest. There are few incentives to convert spot Ether into ETF form, and the network's cash flows have not been impressive. Kang questioned the potential benefits of an ETH ETF, suggesting it might not provide much upside.
Ether, which reached over $4,000 in March when Bitcoin hit a new all-time high, almost achieved the same level again just before the United States Securities and Exchange Commission (SEC) approved Ether ETFs. However, Kang sees spot Ether ETFs attracting only about 15% of the flows that spot Bitcoin ETFs have, aligning with the 10-20% range estimated by Bloomberg ETF analysts Eric Balchunas and James Seyffart.
Kang noted that in the first six months, only $5 billion in new funds (excluding funds converted from spot form) flowed into the spot Bitcoin ETFs. Extrapolating this data to Ethereum suggests that spot Ether ETFs could see $840 million in "true" inflows over the same period.
Kang believes that the expectations of crypto enthusiasts are overinflated and disconnected from the actual preferences of traditional finance allocators.
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