Table of Contents
- Crypto market excitement at imminent ETF launch
- A bucket of cold water
- Spot Bitcoin ETF analysis
- Ethereum ETF expectations are overinflated
Billionaire crypto entrepreneur Andrew Kang has posted on X that in his view, the impact of the launch of a Spot Ethereum ETF would provide “not much” upside, and that it is already “more than priced in”.
Crypto market excitement at imminent ETF launch
With VanEck having just made their 8-A filing for their Spot Ethereum ETF, its launch may be imminent. When VanEck last did this filing for their Spot Bitcoin ETF, the launch happened a week afterwards.
The crypto market is extremely excited about this launch and many investors may have already bought $ETH in anticipation. The general thinking will be that if the Ethereum ETF is anything like as successful as that of Bitcoin, the price is bound to go up.
A bucket of cold water
That said, Andrew Kang, Managing Partner at Mechanism Capital, has thrown a bucket of cold water onto the situation. In an article posted on X, Kang posits that the $ETH price will not see much upside unless it “develops a compelling pathway to improve its economics”
Spot Bitcoin ETF analysis
In his article he starts by analysing the Spot Bitcoin ETF, and states that even though there have been $14.5 billion net inflows, these are not all “true inflows”. What Kang calls the “basis trade” ( carry-trade ) he estimates to account for $4.5 billion, and straight conversion of Spot Bitcoin into the ETFs he estimates at $5 billion. Therefore he says that the true inflow is nearer to $5 billion.
Kang cites Eric Balchunas’ estimate that the Ethereum ETF could attract 10% of what went into the Bitcoin ETF, which leaves the figure of around $0.5 billion. His own figure is slightly higher at $0.84 billion.
When posing the question of how BTC managed to go from $40,000 to $65,000 by way of the ETF buying, Kang simply states that this was not the case. He says that “other buyers” in the spot markets were those mainly responsible for the price surge. He adds in his view that there is a demand flow for BTC this year of between $40 billion to as much as $130+ billion.
Ethereum ETF expectations are overinflated
However, for Ethereum, Kang takes the view that the “expectations of crypto natives are overinflated.” He states:
"It is natural that those deep in the crypto space have a relatively high mind share and buy in of Ethereum. In reality, it has much less buy in as a key portfolio allocation for many large groups of non crypto native capital."
The billionaire analyst says that he believes $ETH will trade from $2,400 to $3,000 after the launch but does add that if $BTC goes to $100,000 at the end of this year or into Q1 of 2025, then this could “drag $ETH along to ATHs.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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