Arthur Hayes is the former Bitmex CEO and a crypto and financial expert. In a recently published market analysis, Hayes shared his assessment of the impact of the Ethereum merge,
Arthur Hayes went through four different scenarios in the market analysis, with which he estimated the future development of the ETH price: The most bullish and, in his opinion, the most likely Ethereum price forecast: the ETH price could rise to $ 5000 by March 2023.
According to the crypto expert, two factors are decisive for the further development of the ETH price: the upcoming interest rate decisions of the US Central Bank and the success of the Ethereum merge.
Interest rate cuts and a loose and inflationary monetary policy could have a positive effect on the Ethereum price, as in the last crypto bullrun. Low interest rates mean that more capital flows into the markets. Conversely, it is possible that we will see a further tightening of monetary policy, which will have a negative impact on the stock and crypto markets, as was and is the case with the current bear market.
High interest rates make bonds more attractive compared to stocks, as bonds offer a larger and at the same time risk-free return, while at the same time less capital flows into the markets.
Hayes assumes that the FED will ease monetary policy. Since the ETH miners react as one would expect in a really upcoming merge, the crypto expert is convinced of this, that the merge will be carried out successfully this year.
Ethereum 2.0: A picture of BeInCrypto.com
Arthur Hayes: Ethereum Merge Is Like a Triple Bitcoin Halving
According to Hayes, the Ethereum merge will lead to a supply shock comparable to a “triple Bitcoin halving. With a Bitcoin halving, the number of BTC that the miners receive as a reward for securing the network is halved. Since the number of issued BTC decreased after each halving and the available market supply decreased, in the past the Bitcoin price also continued to rise after the halving events.
Since the Ethereum merge changes the consensus mechanism of the Ethereum blockchain from proof-of-work to proof-of-stake, no miners will sell ETH on the market in the future. After the merge, however, about 10% of the miners will still be active for technical and security reasons. That’s why Hayes called the merge a “triple Bitcoin halving”, as the number of ETH spent drops by 90% (3 Halvings roughly correspond to a 90% reduction in the issued ETH: 50 %/ 25 % /12,5 %).
Since the Bitcoin price increased by “at least” 160% after the last 3 halving events, the Ethereum price could also increase by 160% after the merge. However, according to Hayes, this is a rather conservative forecast. On the one hand, Hayes uses the minimum price increase after a Bitcoin halving for the forecast.
On the other hand, Ethereum is not only a decentralized means of payment compared to Bitcoin. Ethereum is both a decentralized smart contract platform and the home of DeFi. Since DeFi protocols required ETH and the DeFi sector could continue to grow, a falling supply meets a potentially rising demand. This in turn has a positive effect on the ETH course.
Hayes’ Four ETH Price Forecasts
Depending on the FED’s monetary policy and the success of the ETH merge, the former Bitmex CEO made four price forecasts:
- A loosening of monetary policy and a successful Ethereum Merge: Ethereum exchange rate will be reduced to at least in March 2023 $5,000 rise
- A tightening of monetary policy and a successful Ethereum merge: the ETH exchange rate will be fixed in March 2023 at $3,562 be
- An easing of monetary policy and an unsuccessful ETH merge: the ETH price will rise at $1,600 aligning
- A tightened monetary policy and an unsuccessful merge: the Ethereum price is reduced to the 1.000-US Dollars Mark fall back