Arthur Hayes, a co-founder and former CEO of cryptocurrency exchange BitMEX, says that the “Ethereum Merge” could send ether prices to $10,000.
What happened: Hayes posted his predictions on Medium in an article called “Five Ducking Digits,” where he outlined what the merge will mean for the blockchain network, why he’s recently become more bullish on ether, and how investors can prepare for Ethereum 2.0.
- Hayes wrote that post-merge, Ethereum will present new investment opportunities. He sees ETH as neither a commodity nor a currency but rather “an infinite duration bond,” a label that will make the cryptocurrency more appealing to money managers or “fiduciary clowns,” as he calls them.
- “The native rewards issued to validators in the form of ETH-based issuance and network fees for staking ETH in validator nodes renders ETH a bond,” he wrote. Experts have speculated that staking yields could range from 10-15%.
- “When the dust settles at year-end, I believe ETH will be trading north of $10,000,” he wrote, adding that he is transitioning his crypto holdings from a 50/50 Bitcoin and ether split to a 25/75 ratio to reflect his prediction.
Why it matters: The merge is expected to take place by the end of June and will allow users to become validators by staking 32 ether (as of this writing, ether is sitting at US$3,437, making the cost of becoming a validator on Eth 2.0 over US$100,000).
- The Ethereum Merge will transition the consensus mechanism of the blockchain from Proof-of-Work to Proof-of-Stake, a more secure and scalable method of validating transactions that will reduce the network’s energy consumption by 99%.
- Hayes pointed out that post-merge Ethereum will outperform any rival blockchains that tout faster and cheaper transactions because it “supports extremely positive price fundamentals from a flow of and return on capital basis.”
Big picture: Crypto’s environmental impact has been a big topic this year, so if Ethereum meets environmental, social and governance (ESG) criteria post-merge, it becomes much more appealing for investors and more accessible for institutions to adopt—not to mention those top tier yields.