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

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Analyst predicts sharp drop to $2.4K for Ethereum post-ETF launch.

Ethereum ETF

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  • Analyst warns that ETH could dump to $2.4K after ETF launch 
  • Another market observer blamed macro conditions, BTC and SOL, for ETH’s negative sentiment. 

Expectations of the Ethereum [ETH] ETF have been low, and analysts have had mixed views on the topic. 

As of press time, ETH retreated to a low of $3.2K, an 18% drop from its recent high of $3.9K after the partial approval of ETFs in late May. 

With only days to possible ETF launch, Andrew Kang, founder of crypto fund Mechanism Capital, expected ETH to drop further to $2.4K. Part of his recent analysis read

‘Before the ETF launch, I expect ETH to trade from $3,000 to $3,800. After the ETF launch my expectation is $2,400 to $3,000.’

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

First, the SEC’s 180-degree pivot and approval in late May was a surprise move that limited the time to convince large ETH holders to move to ETF. 

Secondly, Kang cited that moving to ETF doesn’t come with staking yield perks. As a result, he estimated ETH ETF could attract only 30% of BTC ETF flows in the first six months, approximately about $1.5 – $4.5 billion. 

Other reasons for Ethereum’s negative sentiment

On his part, Quinn Thompson, founder of crypto hedge fund Lekker Capital, suggested that the negative ETH sentiment stemmed from being under the shadow of 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 also noted that the BTC ETFs and massive interest in underpriced SOL further isolated ETH into ‘middle child syndrome.’ Moreover, the liquidity crunch made things worse, 

‘On top of that, overall prices have been stagnant to down for 3 months and market sentiment is in the gutter due to a macro/liquidity blip.’

Despite the negative sentiment, other analysts, like QCP Capital, maintained a bullish outlook ahead of the ETF launch in early July and noted

‘ETH bullishness persists with ETH vols trading at an 18% premium to BTC in expectation of an imminent ETH spot ETF launch.’

QCP analysts had previously projected a retest of $4K was possible after the ETF launch. As of press time, ETH traded at $3.2K, and it remains to be seen how ETF will determine volatility and price direction. 

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Benjamin is a Telecommunication Engineering graduate who is passionate about crypto-markets and unraveling market trends. Armed with charts and patterns, he's interested in making the intricate, complex landscape of digital assets more palatable for every user.
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