BitMEX Co-Founder Labels Post-Merge Ethereum a ‘Bond’ and Predicts a Five-Digit Price by Year-End

Arthur Hayes, a co-founder of the troubled crypto exchange BitMEX, has predicted that Ethereum will outperform competitors in the DeFi ecosystem. The controversial crypto figure and trader also sees its native Ether token rising to $10,000 before the end of the year. In a recent post, Hayes explained that while Bitcoin was initially his preferred crypto-token, his view has changed, and his portfolio now reflects just that.

The BitMEX executive revealed that he had an equally balanced portfolio between BTC and ETH at the start of the year. However, citing the former’s failure to return value in the face of economic adversity, the BitMEX executive made a decision to shift his holdings to become 75% to 25% in favor of ETH.

With the assertion that Bitcoin intrinsically yields nothing as its pure money, Hayes advised that MicroStrategy should deviate from its current Bitcoin-stacking rampage and instead issue debt and purchase ETH, which would serve as a carry trade.

He explained that, unlike Bitcoin, Ethereum is more of an asset than money in design. He sees it’s as an asset that powers the largest decentralized computer network on earth and thus cannot be considered a “pure monetary instrument.”

The proof of stake effect

The Ethereum network is due an upgrade with the plan to transition into proof of stake via the merger with the Beacon Chain. The BitMEX co-founder, like many industry experts, believes that this transition will have a significant impact on the token’s price.

Hayes elucidated in the blog post that initial estimates show that the introduction of staking will give stakers rewards of up to 11% in annual returns. This would be a significant bump on any rates offered by traditional debt markets.

The PoS chain would also cut down Ethereum’s power consumption by up to 99.98%, making it more accessible to users who are currently financially unable to cope with the expensive mining hardware requirements. Reduced power consumption would also mean compliance with ESG goals.

In return, he expects that this would attract increased institutional investment, which would translate to a better price level for ETH. Hayes also feels that the PoS transition would make the Ether rewarded to validators a commodity-linked bond, meaning it becomes a yielding asset, offering the certainty that enterprise investors often thrive in.

Hayes also said that any potential Ethereum alternatives, including Avalanche, Terra, Solana, Cardano, and Polkadot that have in the past promised to better Ethereum’s performance in fees and speed, would not near Ethereum’s price performance this year. He explained that such a narrative had only worked in the two-years ending 2021 and could not suffice now as Ethereum’s fundamentals are now remarkably better.

Ethereum (ETH) price action

Market data shows Ether has not seen any significant price movement in the last couple of hours. Though the ETH/USD briefly pulled back to $3,225 at the end of last week, it has bounced back, ruling out immediate concerns of a price crash. The pair has continued hovering around $3,500 – a level it reached following a recovery run that started around March 15.

ETH/USD 30-day trading chart

Ether’s price has increased by 24.59% during these three weeks, from $2,611 to $3,525, where it was observed at the time of writing. The ascent has seen it close the gap to its record high – it is currently 28.11% below its November all-time high of $4,891.70. This is the closest it has been since January 6. Meanwhile, Haye’s predicted price levels would need about 183% gains.

On-chain data (GIOM metrics) suggests that Ethereum is still poised to see more gains with the upward momentum expected to taper off at around $4,080. Here, most traders will likely reconsider profit-taking.

To learn more about this token visit our Investing in Ethereum guide.