- Hayes predicts Ethereum price might hit the $5,000 mark if a particular scenario plays out.
- The former BitMEX boss believes that the decentralized finance sector is a suitable alternative to the current financial infrastructure.
BitMEX co-founder and former CEO, Arthur Hayes, has shared insights into how the price of the second largest digital asset (Ethereum) can soar. Hayes shared his views via a recent blog post, predicting that the Ethereum price could reach up to $5,000 post-Merge. However, he added that that would only happen if the network’s transition to a proof-of-stake must be a success and the US Fed no longer hikes rates aggressively.
Hayes said Ethereum should still reclaim the $3,500 level without the Fed pivot. The former BitMEX CEO also shared similar views as Vitalik Buterin (Ethereum CEO) in that the merge isn’t priced in by the market yet. Hayes said he is confident that the event won’t be a “buy the rumor, sell the news” type.
If the network doesn’t change its plans, the merge will happen as scheduled on September 19. 2022. Ethereum will likely become more scarce following the merge despite an increase in demand. The merge will also cause Ethereum to become deflationary. The rising popularity of decentralized finance applications (dApps) will also cause the deflation rate to keep rising.
Currently, Ethereum powers most of the top dApps worldwide. Before 2020, Hayes was a strong critic of Ethereum. In 2018, he accurately predicted the double-digit drop in the digital asset’s price. However, he became an Ethereum proponent after 2020. The former BitMEX CEO believes decentralized finance is more suitable than the current financial system.
Hayes also predicts that if Ethereum’s transition to a proof-of-stake network isn’t a success and the Fed’s aggressive rate increases don’t subside, Ethereum will return to the “dark ages.” Data shows that the second leading digital asset trades at $1,661 after gaining 1.89 percent in the last 24 hours. However, it remains 65.93 percent off its all-time high price.
Miners can ruin Ethereum’s PoS success
Hayes also said Ethereum miners are a group of Ethereum network stakeholders that can ruin the chances of success for the network’s PoS switch. He notes that once Ethereum completes its PoS switch, the miners’ equipment and facilities would be practically worthless, and their revenue would drop to nothing.
Their only option is to find a chain with value to mine that can offer them similar marginal revenue that they currently enjoy on Ethereum’s proof-of-work (PoW). However, Hayes said he doubts whether that would be possible given that there isn’t any other PoW blockchain with a similar market cap as Ethereum.
He also claims that the Chinese Ethereum mining community is already planning to fork the Ethereum network and form an Ethereum chain based on PoW. It is worth noting that last week, Buterin suggested that current Ethereum miners could become miners on the Ethereum classic blockchain as it is still a viable PoW blockchain.