Former BitMEX CEO Arthur Hayes published a prediction for Ethereum. In a after Titled “Five Ducking Digits”, Hayes argues for the second cryptocurrency in terms of market cap.
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At the time of writing, Ethereum is trading at $3,400 with a 5% gain in the last 24 hours.
ETH’s price trends are moving upwards on the 4-hour chart. Source: ETHUSD trading display
As Coin-Crypto reported, Hayes believes that the current financial system has entered a new phase as a result of the war between Russia and Ukraine. The international community imposed sanctions on the former country in response.
Russia has been cut off from the international financial system, its social elite has been punished and its gold reserves have been confiscated. The Vladimir Putin-led country and other superpowers, Hayes argued in his dissertation, will push for the dethronement of the US dollar as the global reserve currency.
This will lead to higher gold and Bitcoin prices as people will flee to stores of value and neutral money systems. Hayes’ latest post follows this idea of the global financial crisis that will benefit cryptocurrencies.
Hayes Prediction On Ethereum, Why The Financial Industry Will Embrace It
The former BitMEX argued that Ethereum will see appreciation based on two key factors. First, the full deployment of ETH 2.0 capabilities with “The Merge”.
This event joins the execution layer of Ethereum or ETH 1.0 with its consensus layer or ETH 2.0, the Proof-of-Stake blockchain. It is set to reduce the energy consumption of ETH’s network by 99%, and will give the digital asset a strong story: it will become ESG compliant.
In other words, institutions will be able to trade and create investment products based on the cryptocurrency without facing backlash based on the consensus algorithm. When Tesla invested in Bitcoin, the company’s CEO, Elon Musk, had to stop accepting it as a means of payment.
The first crypto is considered an environmental threat by its opponents.
After the merge, Ethereum will reward its node validators for deploying ETH and securing the network. This will create another story, Ethereum can be considered a bond for the benefit of the “financial advisors”, for the elite in the financial sector.
So it could see greater adoption. Hayes explained:
(…) coupled with ETH 2.0’s ESG compliant label (another stamp of intellectual ossification) and protocol stats more attractive than the framework of layer-1 (L1) “Ethereum killers” makes ETH extremely undervalued vs. . Bitcoin, fiat and other L1 competitors.
ETH holders will be the biggest winners
“The Merge” will provide strikers with an initial annual rate of 8% to 11.5% (APR), according to data provided by Hayes. As an asset as a bond, ETH will provide new investment opportunities.
A bond is a form of debt created between two parties, a company, the government or in this case the Ethereum network. In addition to a simple price prediction, Hayes invited traders to consider this new opportunity as ETH prepares for the upcoming “Merge”. He said:
If you believe that ETH can or should be valued as a bond, then given your assumptions about long-term interest rates and ETH reward, you as an investor should be willing to buy ETH at current prices (…)
This trading opportunity, along with the full deployment of the PoS capabilities, will attract new capital. Money from “ESG-friendly” investors seeking crypto exposure, but unable to obtain as long as PoW is the dominant consensus algorithm. Hayes added:
Sentiment will change when ETH becomes an ESG-friendly POS blockchain, which ESG funds can then invest in. This opens up ETH to hundreds of billions of USD of fiduciaries who can now invest safely thanks to ETH’s classification (…).
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Hayes believes ETH will outperform in the low-1 sector in the coming months. This event could capture market share from the “ETH Killers” such as Cardano, Terra, Avalanche, Solana and Polkadot.