Ethereum (ETH) has demonstrated a robust performance since the beginning of 2024, appreciating nearly 50% from January 1 and surpassing the $4,000 mark in March. However, the cryptocurrency has faced challenges over the past 30 days, experiencing a decline of approximately 11%.
Despite this recent downturn, popular crypto analyst degentrading remains optimistic, forecasting that Ethereum will reach $6,000 by September 2024.
This prediction comes in response to a more skeptical outlook by Andrew Kang, founder of Mechanism Capital. Kang remains doubtful about Ethereum’s potential despite the imminent launch of Ethereum spot exchange-traded funds (ETFs) in the U.S.
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His analysis suggests a downtrend for the ETHBTC ratio, predicting it will fluctuate between 0.035 and 0.06 over the next year.
Bullish sentiment and key drivers for Ethereum
Degentrading’s bullish outlook is based on several key factors. One significant aspect is the substantial increase in CME open interest, which has risen by $5 billion from pre-ETF levels. This easing of trading constraints could unlock large capital inflows into the market.
Additionally, Ethereum’s relative illiquidity compared to Bitcoin is notable. Ethereum is roughly one-third the size of Bitcoin in market capitalization but only about 10% of its liquidity. Thus, an influx of $3-4 billion could notably boost Ethereum’s price.
Further bolstering positive sentiment is the upcoming launch of Ethereum ETFs. Expectations for $500 million of inflows over the next six months are setting the stage for a potential bullish run.
Degentrading also points to the anticipated conversion of Grayscale’s Ethereum Trust (ETHE) into an ETF. He emphasizes that ETHE is likely to face less selling pressure compared to the Grayscale Bitcoin Trust (GBTC) due to a lesser lender overhang, which could support a more stable price increase.
Skeptical perspectives and market challenges
In contrast, Andrew Kang highlights several challenges. He points out the decline of prime brokers like Genesis, which complicates spot borrowing as a hedge against CME futures longs. Moreover, the cost implications of holding a cash and carry position could impact market maker profitability, potentially limiting the anticipated capital inflows.
Kang also notes the involvement of large funds like Millennium, which owns $2 billion of the ETF. These funds typically engage in basis trades rather than holding long-only positions.
While Degentrading acknowledges this, he counters by pointing out the strong enthusiasm for ETH and Solana (SOL) among traditional finance professionals compared to BTC, further supporting his optimistic outlook for Ethereum’s price.
At the press time, Ethereum is trading at $3,356.09, reflecting a 0.86% decrease in the last 24 hours.
The Ethereum market is at a pivotal point, with contrasting views from leading analysts. While degentrading highlights potential significant inflows and positive market sentiment, Andrew Kang underscores the challenges and uncertainties that lie ahead.
Investors should carefully consider these perspectives and closely monitor market developments as Ethereum navigates the coming months.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
