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Popular crypto analyst degentrading (@degentradingLSD) has made a bold prediction that Ethereum will reach $6,000 by September 2024. This prediction comes in response to an analysis by Mechanism Capital founder Andrew Kang, who expects Ethereum to underperform despite the imminent launch of US spot Ethereum ETFs. Andrew Kang’s analysis projects a continued downtrend for ETHBTC, with the ratio expected to range between 0.035 and 0.06 over the next year. In his detailed thread on X, Kang expressed skepticism about Ethereum\u2019s potential, despite the ETF launch being just days away. Why Ethereum Could Reach $6,000 By September Degentrading, however, presented a counter-argument in a thread on X. Degentrading begins by examining the change in CME open interest (OI) from pre-ETF days to the present, noting a substantial increase of approximately $5 billion. He explains, \u201cPre-ETF, it was very onerous to perform cash and carry on CME due to margin requirements. Hence, the upper bound of basis trades is probably capped at that amount.\u201d This insight suggests that the advent of the ETF could significantly ease trading constraints, potentially unlocking a large influx of capital. However, he tempers this by discussing the challenges posed by the extinction of prime brokers like Genesis, which complicates spot borrowing as a hedge against CME futures longs. According to degentrading, \u201cUnless market makers can frequently charge a bid\/ask spread, they are effectively locking in a loss. Therefore, the sheer amount of CME basis trades has to be a minority. I would peg the figure at $1-2 billion max.\u201d This leaves an estimated $7 billion in potential inflows, a figure he describes as \u201chighly dependent on assumptions.\u201d Related Reading: Ethereum (ETH) Records Surge In Active Addresses \u2013 Incoming Price Rebound? Degentrading contrasts Ethereum\u2019s position with that of Bitcoin, criticizing sentiments from analysts like Eric Balchunas. \u201cNothing in traditional finance is as exciting as tech. Bitcoin has the branding of digital gold or millennial gold. Gold\u2019s market cap is approximately $15 trillion,\u201d he notes. In contrast, Ethereum is seen as a decentralized global settlement layer or world computer, with the US stock market already valued at $50 trillion. This, he argues, sets a much higher ceiling for Ethereum. He further explains that in his discussions with traditional finance (tradfi) professionals, there is more enthusiasm for ETH and even SOL compared to BTC. \u201cPeople are much more excited about ETH or SOL for that matter. Hence, I would peg the inflow conversion rate at half of Bitcoin\u2019s, which translates to about $3-4 billion into ETH,\u201d degentrading asserts. One of the key points in degentrading\u2019s argument is Ethereum\u2019s relative illiquidity compared to Bitcoin. He highlights that while Ethereum is roughly one-third the size of Bitcoin, its liquidity is only about 10% of BTC. \u201cThis means that an influx of $3-4 billion will materially move ETH,\u201d he emphasizes. This illiquidity could lead to significant price movements with relatively smaller capital inflows. Addressing the market\u2019s current positioning, degentrading points out the overall bleak sentiment on Crypto Twitter (CT), viewing it as the best technical setup for Ethereum. He notes, \u201cOn the cusp of the ETH ETF launch, you have people setting expectations for $500 million of inflows over six months. This is the BEST technical setup for ETH.\u201d Related Reading: 3 Reasons To Invest In Ethereum, 1 To Stay Bitcoin-Only: Bitwise CIO An important factor in degentrading\u2019s analysis is the anticipated conversion of Grayscale\u2019s Ethereum Trust (ETHE) into an ETF. He suggests that ETHE will likely face much less selling pressure compared to the Grayscale Bitcoin Trust (GBTC) due to a lesser lender overhang. \u201cETHE will also likely face MUCH LESS selling pressure than GBTC because of the much lesser lender overhang,\u201d he notes. Impact Of Cash And Carry Trades Andrew Kang responded to degentrading\u2019s analysis, highlighting the involvement of large funds like Millennium, which owns $2 billion of the ETF. Kang points out that such funds engage in basis trades and are not long-only investment funds. \u201cMillennium by itself owns $2 billion of the ETF. They are not a long-only investment fund. They do these types of basis trades. That\u2019s only one fund from an old filing,\u201d Kang stated. Degentrading acknowledged this but emphasized the cost implications of holding a cash and carry position. He argued that the cost of holding such positions nets out significant amounts, which impacts the market maker\u2019s profitability. \u201cOn that thought, the cost of holding a cash and carry would net out $300 million to Millennium and cost the market maker that amount, implying that the delta is borne by a naked delta on the futures,\u201d degentrading retorted. At press time, ETH traded at $3,362.90. 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Will Ethereum Skyrocket? Analyst Predicts $6,000 By September<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n