Former BitMEX CEO Arthur Hayes has published a prediction for Ethereum. at Mail Titled “Five Ducking Digits,” Hayes presents the bullish case for the second cryptocurrency by market capitalization.
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At the time of writing, Ethereum is trading at $3,400 with a 5% gain in the last 24 hours.
As reported by NewsBTC, Hayes believes that the current financial system has begun 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 was cut off from the international financial system, its social elite was punished, and its gold reserves were confiscated. Hayes argued in his thesis that the country led by Vladimir Putin and other great powers would push to abandon the US dollar as the global reserve currency.
This will cause gold and bitcoin prices to rise as people will flee to stores of value and cash-neutral systems. Hayes’ latest post follows the idea of the global financial crisis that will benefit cryptocurrencies.
Hayes predicts Ethereum, why the financial sector will accept it
Previous BitMEX argued that Ethereum will see a rally on the back of two main factors. First, the full deployment of ETH 2.0 capabilities with “merge”.
This event will join the Ethereum or ETH 1.0 implementation layer with its own consensus layer, or ETH 2.0, the Proof of Stake blockchain. Set to reduce ETH network power consumption by 99%, it will provide the digital asset with a strong narrative: it will become ESG compliant.
In other words, institutions will be able to trade and create investment products based on cryptocurrency without facing a backlash based on their consensus algorithm. When Tesla invested in Bitcoin, the company’s CEO, Elon Musk, had to stop accepting it as a form of payment.
Crypto-first is considered a threat to the environment by its critics.
After the merger, Ethereum will provide node validators with rewards for piling ETH and securing the network. This will create another narrative, Ethereum can be seen as a bond in favor of elite “financial advisors” in the financial sector.
Thus, it could experience greater dependence. Hayes explained:
(…) Combined with the ETH 2.0 ESG-compatible token (another character of intellectual ostentation), the most attractive protocol metrics from the Layer 1 (L1) cadre “Ethereum killers” make ETH significantly undervalued on a relative basis against Bitcoin, fiat and other L1 competitors.
ETH holders will be the biggest winners
The “consolidation” program will provide contractors, according to data provided by Hayes, an initial annual percentage rate (APR) of 8% to 11.5%. As an asset that acts like a bond, ETH will present new investment opportunities.
A bond is a form of debt created between two parties, a company, a government, or in this case the Ethereum network. Beyond a simple price prediction, Hayes invites traders to consider this new possibility as ETH prepares for the upcoming “merging.” He said:
If you believe that ETH can or should be valued as a bond, then as an investor – given the long-term interest rate and bonus assumptions of ETH – 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 new capital. Funds from “ESG-friendly” investors who are looking for exposure to cryptocurrency, but are unable to obtain it as long as Proof of Work is the dominant consensus algorithm. Hayes added:
Sentiments will change when the ETH POS blockchain becomes green and governance friendly, which ESG funds can invest in. This opens up ETH to hundreds of billions of US dollars from agents who can now invest safely (…) due to the ETH rating.
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In the coming months, Hayes believes that ETH will outperform the Tier 1 segment. This event could take market share from “ETH Killers”, such as Cardano, Terra, Avalanche, Solana and Polkadot.