Arthur Hayes’ Crystal Ball Predicts: Ethereum To 5 Digits

Reynaldo Marquez

3 years ago

3 mins read

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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.

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.

Hayes Prediction On Ethereum, Why The Financial Sector Will Embrace It

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.

ETH Holders Will Be The Biggest Winners

“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 (…).

Related Reading | TA: Ethereum Trims Gains, $3,200 Is The Key

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.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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