Since early 2024, Ethereum (ETH) has been performing strongly, with a nearly 50% increase since January 1st and breaking the $4000 mark in March. However, the cryptocurrency has faced challenges in the past 30 days, with a drop of about 11%.
Despite this recent downturn, popular cryptocurrency analyst Deentrading remains optimistic, predicting that Ethereum will reach $6000 by September 2024.
This prediction is in response to a more skeptical outlook from Mechanism Capital founder Andrew Kang. Despite the imminent launch of an Ethereum exchange-traded fund (ETF) in the United States, Kang still doubts Ethereum’s potential.
His analysis indicates that the ETHBTC ratio is trending downward, with fluctuations expected to range between 0.035 and 0.06 next year.
Bullish sentiment and key drivers for Ethereum
Deentrading’s optimistic outlook is based on several key factors. One important aspect is the significant increase in open interest on the Chicago Mercantile Exchange, which has increased by $5 billion compared to pre-ETF levels. The relaxation of trading restrictions could potentially unleash a significant amount of capital into the market.
Additionally, Ethereum’s liquidity is relatively poor compared to Bitcoin. Ethereum’s market cap is about one-third of Bitcoin’s, but its liquidity is only around 10%. Therefore, an inflow of $30-40 billion could significantly boost Ethereum’s price.
The upcoming Ethereum ETF further boosts positive market sentiment. Expectations of $5 billion in inflows over the next six months lay the foundation for a potential bull market.
Deentrading also points out that Grayscale’s Ethereum Trust (ETHE) is likely to convert to an ETF. He emphasizes that Ethereum may face less selling pressure compared to Grayscale’s Bitcoin Trust Fund (GBTC) due to fewer institutional overhangs, which could support a more stable price increase.
Skeptical views and market challenges
In contrast, Andrew Kang highlights several challenges. He points out the decline of major brokers like Genesis, which makes spot lending a complex hedge for long positions on Chicago Mercantile Exchange futures. Additionally, the cost impact of holding cash and arbitrage positions may affect market makers’ profitability, potentially limiting expected capital inflows.
Kang also mentions the involvement of large funds such as Millennium, which has a $20 billion ETF. These funds typically engage in basis trading rather than just holding long positions.
While Deentrading acknowledges this, he argues that compared to BTC, traditional financial professionals are highly enthusiastic about ETH and Solana (SOL), further supporting his optimistic outlook for Ethereum’s price.
At the time of writing, Ethereum’s trading price is $3356.09, reflecting a 0.86% decrease in the past 24 hours.
ETH 7-day price chart. Source: Finbold
The Ethereum market is at a critical juncture, with major analysts having differing views. While Deentrading highlights the potential for significant capital inflows and positive market sentiment, Andrew Kang emphasizes future challenges and uncertainties.
As Ethereum evolves in the coming months, investors should carefully consider these viewpoints and closely monitor market developments.
Disclaimer: The content on this website should not be considered investment advice. Investments are speculative, and your capital is at risk when investing.
