Chainfeeds Introduction:
Andrew Kang, co-founder of Mechanism Capital, published an article analyzing the impact of Ethereum ETF. In his opinion, compared with BTC ETF, which has opened the door for many new buyers to allocate Bitcoin in their portfolios, the impact of ETH ETF is less obvious. The upside potential of ETH ETF will not be too large unless Ethereum develops a convincing way to improve its economic benefits.
Article Source:
https://x.com/Rewkang/status/1804735595111211104
Article author:
Andrew Kang
View:
Andrew Kang: In general, Bitcoin ETFs have reached $50 billion in AUM. From here we can simply extrapolate to Ethereum. Personally, my benchmark is 15%. Starting with BTC's $5 billion real net value, adjusting for ETH's market cap (33% of BTC) and a 0.5 access factor, we get $840 million in real net buying and $2.52 billion in reported net value. There are some reasonable arguments that ETHE has less turnover than GBTC, so in the optimistic case, I think the real net buying is $1.5 billion and the reported net buying is $4.5 billion. This is about 30% of BTC flow. In either case, the real net buying is much lower than the ETF's derivatives front flow ($2.8 billion), not including spot front flow. This means that the ETF has been priced in more than expected. I even expect fugazi (delta neutral) flows to be lower in the first few weeks for two reasons. First, the approval was a surprise and the issuer did not have that much time to convince large holders to convert their ETH into ETF form. Second, it is less attractive for holders to switch because they need to give up the yield from staking, liquidity mining, or using ETH as collateral for DeFi. Does this mean ETH will go to zero? Of course not, at a certain price it will be considered good value for money, and when BTC rises in the future it will also be pulled higher to a certain extent. Before the ETF is launched, I expect ETH to trade at $3,000 to $3,800. After the ETF is launched, my expectation is $2,400 to $3,000. However, if BTC rises to $100,000 by the end of Q4 2024/Q1 2025, it may lead ETH to reach ATH, but ETHBTC will be lower. I expect ETHBTC to continue to decline, with the ratio between 0.035 and 0.06 next year. 【Original text in English】
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