Arthur Hayes’ Crystal Ball Predicts: Ethereum To 5 Digits

Former BitMEX CEO Arthur Hayes published a prediction for Ethereum. In a post titled “Five Ducking Digits”, Hayes makes the bullish case for the second cryptocurrency in terms of market cap.

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At the time of writing, Ethereum trades at $3,400 with a 5% profit in the last 24 hours.

As NewsBTC reported, Hayes believes the current financial system began a new phase as a consequence of the war between Russia and Ukraine. The international community imposed sanctions on the former country as a response.

Russia has been cut off from the international financial system, its social elite has been punished, and its gold reserves seized. The Vladimir Putin-led country and other superpowers, Hayes argued in his thesis, will push to dethrone the U.S. dollars as a global reserve currency.

This will lead to higher Gold and Bitcoin prices as people will flee to stores of value, and neutral monetary systems. Hayes’ latest post follows this idea of the global financial crisis that will benefit cryptocurrencies.

The former BitMEX argued that Ethereum will see appreciation on the back of two main factors. First, the full deployment of ETH 2.0 capabilities with “The Merge”.

This event will join Ethereum’s execution layer or ETH 1.0 with its consensus layer or ETH 2.0, the Proof-of-Stake blockchain. Set to reduce ETH’s network energy consumption by 99%, it’ll provide the digital asset with a strong narrative: it’ll 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 its consensus algorithm. When Tesla invested in Bitcoin, the company’s CEO, Elon Musk, had to stop accepting it as a form of payment.

The first crypto is considered a threat to the environment by its detractors.

Post Merge, Ethereum will provide its node validators with rewards for staking ETH and securing the network. This will create another narrative, Ethereum could be deemed a bond for the benefit of the “financial advisors”, for the elite in the financial sector.

Thus, it could see greater adoption. Hayes explained:

(…) paired with ETH 2.0’s ESG-compliant label (another stamp of intellectual ossification), and protocol metrics that are more attractive than the cadre of layer-1 (L1) “Ethereum killers” makes ETH supremely undervalued on a relative basis vs. Bitcoin, fiat, and other L1 competitors.

“The Merge” will provide stakers, according to data provided by Hayes, with an initial 8% to 11.5% Annual Percentage Rate (APR). As an asset operating like a bond ETH will present new investment opportunities.

A bond is a form of debt created between two parties, a company, government, or in this case the Ethereum network. Beyond a simple price prediction, Hayes invited traders to consider this new possibility as ETH prepares for its upcoming “Merge”. He said:

If you believe that ETH can or should be valued as a bond, then as an investor – given your long-term interest rate and ETH reward assumptions – you should be willing to buy ETH at today’s prices (…)

This trading opportunity, along with the full deployment of its PoS capabilities will attract fresh capital. Money from “ESG-friendly” investors looking for crypto exposure, but unable to obtain as long as PoW is the dominant consensus algorithm. Hayes added:

Sentiment will all 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 worth of fiduciaries who due to ETH’s classification, can now safely invest (…).

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In the coming months, Hayes believes ETH will outperform in the layer-1 sector. This event could take market share from the “ETH Killers”, such as Cardano, Terra, Avalanche, Solana, and Polkadot.