Andrew Kang: Ethereum is not Nvidia, with poor fundamentals it's more like Intel

Venture capital firm Mechanism's co-founder Andrew Kang wrote that the upside for an Ethereum ETF is limited, and in the long term, Ethereum is more likely to resemble Intel on a downhill trajectory, rather than Nvidia or Amazon.

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Ethereum ETF Limited Upside Potential

I. ETH Has Followed BTC's Upsurge

Andrew Kang mentioned that when he submitted a Bitcoin ETF application to BlackRock, he was bullish on Bitcoin's skyrocketing price. Since then, Bitcoin has risen by about 2.6 times, while ETH has risen by approximately 2.1 times.

Looking at the bottom of the cycle, both BTC and ETH have surged by about 4 times. Therefore, even if an Ethereum ETF is successfully launched, will there still be room for further price increases?

He believes that unless there is a significant improvement in Ethereum's fundamentals, he does not foresee substantial further price increases.

II. Bitcoin Spot ETF Net Inflows Overstated

He then pointed out that the assets under management of the Bitcoin ETF have reached $50 billion, with reported net inflows of $14.5 billion since its launch. However, this does not represent actual fund inflows, as it needs to account for arbitrage trades and spot transfers, among other neutral fund inflows.

He estimated that approximately $450 million of net flow is from arbitrage trades, and large holders like BlockOne have converted a significant amount of BTC spot to the ETF, totaling around $5 billion, resulting in actual net inflows of only $5 billion for the Bitcoin ETF.

III. ETH Flows Will Only Be 15% of BTC

Bloomberg ETF analyst Eric Balchunas once estimated that ETH flows might only be 10% of BTC's. Based on the second point, he predicts that the net inflows of an ETH spot ETF six months after its launch would be approximately $1.5 billion on the books and only $500 million in actual net inflows.

Andrew Kang predicts that the actual net inflows will likely be around 15% of BTC's, and the familiarity with ETH in the crypto space might lead to higher expectations for an Ethereum ETF compared to traditional retail investors. The public might not be as enthusiastic about ETH compared to BTC.

He believes that after the launch of an Ethereum ETF, the ETF price will drop to $2,400 to $3,000.

Elders Do Not Understand "Ethereum," Lack of Traditional Market Appeal for ETH ETF?

Ethereum Resembles Intel, Not NVDA or AMZN

Following the analysis of "Ethereum ETF Limited Upside Potential," Andrew Kang further criticized Ethereum's price trends and fundamentals.

Ethereum is often seen as a tech stock; he believes that ETH's trajectory is similar to Intel and Cisco, which have experienced long-term declines:

With growth constraints, slowing innovation, and increasing competition eroding market share, Intel has experienced several bubbles in the past. This affects investor willingness to invest. Tell me, how can you sell a $420 billion Ethereum market value with a P/E ratio of 200 and negative revenue growth? Crypto fools might buy, but given the current fundamentals, believing that traditional finance will inject a certain amount of funds is simply wishful thinking.

On-Chain Activities Shifting to Major Public Chains

Andrew Kang concluded:

Believing that Ethereum is on the path of NVDA or AMZN is simply wishful thinking. These companies have compelling annual growth plans and historical revenue growth, whereas Ethereum is the opposite. NFTs are dying, on-chain transactions are moving to other chains, on-chain fees are decreasing; this is a typical bubble peak that occurs every cycle.