The former CEO and co-founder of BitMEX, Arthur Hayes, says that Ethereum is likely to be prepared for a corrective movement in the coming weeks, regardless of the outcome of the upcoming update.
In a new blog post, Hayes writes that Ethereum could experience a sharp price drop if The Merge is not successful.
“If The Merge is unsuccessful, the dump will be fast and vicious, given the high expectations of the market compared to objective reality ….
There will be a negative reflexive relationship between the price and the level of currency deflation. Or, to put it another way, there will be a positively reflexive relationship between the price and the level of currency inflation. Therefore, I believe that in this scenario, traders will either go short or choose not to own ETH.
This relationship has a reason that the network is the longest-running decentralized network. ETH reached a very large market capitalization without a merger narrative. The most popular dApps [dezentralisierte Anwendungen] are created using Ethereum, and Ethereum also owns the largest number of developers of all layer 1 chains.”
Hayes can’t imagine Ethereum falling below the range of $800 to $1,000.
At the time of writing, the price of ETH is $ 1,850. Over the past 24 hours, ETH has fallen by almost 3%.
The highly anticipated transition from proof-of-work to proof-of-stake is currently scheduled for September 15.
The Merge aims to solve the scalability problems of the network by creating the conditions for future upgrades, including sharding.
On the other hand, Hayes says that a successful upgrade will spark an ETH rally, although he acknowledges that it will not happen immediately.
“The structural decline in inflation will occur only after the merger. I assume that it will play out similarly to Bitcoin halvings – i.e. we all know the dates on which they will take place, and yet Bitcoin is still recovering after the halving.
However, it is possible that the price of ETH will decrease slightly in the direction and immediately after the merger. If you cut partially or completely, you will initially have a good feeling when making your decision. However, if deflation sets in and due to the reflexive relationship between a high and rising ETH price and the use of the network, the price could gradually continue to rise. At this point, you would have to decide when to return to your position.”