Ethereum: Will ETFs push ETH to $4K or drag it down to $2.4K?

As a seasoned crypto investor with a few years under my belt, I’ve learned that the market is always unpredictable, and analysts’ opinions can vary greatly. In this case, the warnings of an ETH dump to $2.4K by Andrew Kang of Mechanism Capital have given me pause. However, I also acknowledge Quinn Thompson’s perspective that macro conditions, BTC, and SOL are contributing factors to Ethereum’s negative sentiment.

Analysts hold varying perspectives regarding the anticipated impact of an Ethereum [ETH] Exchange-Traded Fund (ETF). The general consensus, however, is that expectations are subdued.

At the moment of publication, ETH dipped down to a bottom of $3.2K, representing a 18% decrease from its peak of $3.9K, following the semi-approval of ETFs towards the end of May.

As the anticipated launch of the ETF drawing nearer with just a few days remaining, Andrew Kang, the founder of Mechanism Capital, predicted that Ethereum’s price could still decline to around $2,400. According to his latest assessment.

As a crypto investor, I anticipate that the price of Ethereum (ETH) will fluctuate between $3,000 and $3,800 prior to the exchange-traded fund (ETF) launch. Post-ETF launch, my expectation is for ETH’s price to range from $2,400 to $3,000.

Kang suggested that ETH ETF flows could be dismal in the first few weeks for two reasons.

As a crypto investor, I was taken aback when the Securities and Exchange Commission (SEC) made an unexpected about-face and gave its approval for an Ethereum exchange-traded fund (ETF) in late May. This sudden development left me with limited time to persuade large Ethereum holders to consider shifting their assets to this new investment vehicle before the window of opportunity closed.

Secondly, Kang pointed out that transitioning to an Exchange-Traded Fund (ETF) for Ethereum does not offer the staking rewards that come with holding the asset directly. Consequently, he projected that in the initial six months, Ethereum ETF inflows could draw around 30% of Bitcoin ETF investments, equivalent to roughly $1.5 to $4.5 billion.

Other reasons for Ethereum’s negative sentiment

Quinn Thompson, the founder of Lekker Capital crypto hedge fund, proposed an explanation for the unfavorable attitude towards Ethereum (ETH). He attributed it to Ethereum being overshadowed by Bitcoin (BTC) and Solana (SOL).

Thompson added that SOL’s repricing relative to ETH reinforced the ‘ETH killer’ narrative.

‘SOL has repriced 6x higher relative to ETH, so this is not as easy of a layup as it was’

Thompson pointed out that the surge in popularity for Bitcoin ETFs and the undervalued Solana were exacerbating Ethereum’s sense of being the neglected middle child. Additionally, the liquidity shortage worsened this situation.

In addition, the general trend over the past three months has been for prices to either remain unchanged or decrease. Moreover, there’s a pessimistic atmosphere in the market caused by a major economic or liquidity issue.

In spite of the pessimistic viewpoint held by some analysts, firms such as QCP Capital expressed optimism prior to the ETF’s debut in early July. They highlighted this perspective.

The optimism towards Ethereum (ETH) remains strong as the cost of Ethereum options is 18% higher than that of Bitcoin (BTC), indicating a belief that an Ethereum-backed spot exchange-traded fund (ETF) could be launched imminently.

Previously, QCP analysts forecasted that Ethereum could retreat to around $4,000 following the ETF launch. However, as of now, Ethereum is priced at $3,200 in the market. It’s important to note that the impact of the ETF on Ethereum’s volatility and price trend remains uncertain.

2024-06-25 10:15

Other reasons for Ethereum’s negative sentiment

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