Mechanism Capital: ETH/BTC Price Ratio Potentially Lower?

Bittime - Andrew Kang, co-founder of Mechanism Capital, recently provided a pessimistic view regarding the ETH/BTC price ratio. According to him, this ratio has the potential to fall to 0.04 or even lower. 

ETH Price Before ETF Launch

Andrew Kang's statement is based on an analysis of ETF net inflows which were actually negative after considering neutral delta flows. Additionally, about $4-5 billion of preemptive and leveraged funds face the risk of rapid withdrawal.

ETH experienced a significant rebound before the launch of the ETF, reaching almost $3,600. However, Kang noted that the ETF's net inflows the previous day turned out to be negative after considering neutral delta flows. This suggests that many previously incoming funds are now at risk of rapid withdrawal.

Rapid Withdrawal Risk 

According to Kang, about $4-5 billion of preemptive and leveraged funds that previously entered the market are now at risk of rapid withdrawal. If this happens, the ETH/BTC price ratio could fall to 0.04 or lower. At that point, Kang believed that ETH was no longer attractive as a hedging tool.

Crypto Market Sentiment 

Kang also said that the price of ETH was slightly below his lower limit estimate. This is likely due to sales effects related to Germany and Mt. Gox, as well as fears regarding ETF launch delays. 

Nonetheless, Kang still sees the possibility of a rally in ETH ahead of the ETF approval, although he expects the price ceiling to be around $3,600.

Comparison with Merger (The Merge)

Kang compared the current situation to previous ETH mergers. At that time, ETH prices also peaked just below $3,600 in a rally before the launch of the ETF. 

This time, with ETF net inflows actually negative, Kang warned that the $4-5 billion in preemptive and leveraged funds were at risk of being withdrawn quickly, which could lead to a decline in the ETH/BTC price ratio.

So, investors need to be alert to this potential decline in the ETH/BTC price ratio. Given the risks of preemptive and leveraged withdrawals, investors may need to consider other hedging strategies.  

How to Buy Crypto with Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime. I'm done is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Monitor graphic movement price Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.