Former BitMEX CEO Arthur Hayes says Ethereum (ETH) is likely primed for a corrective move in the coming weeks regardless of the outcome of its upcoming update.
In a new blog post, Hayes argues that if The Merge is unsuccessful, the leading smart contract platform could witness a sharp decrease in price.
“If The Merge is unsuccessful, the dump will be quick and vicious given the market’s high expectations versus the objective reality….
There will be a negatively reflexive relationship between the price and the amount of currency deflation. Or, to put it another way, there will be a positively reflexive relationship between the price and the amount of currency inflation. Therefore, in this scenario, I believe traders will either go short or choose not to own ETH.
There is a floor to this relationship in that the network is the longest operating decentralized network. ETH hit a very large market cap without a merge narrative. The most popular DApps [decentralized applications] are built using Ethereum, and Ethereum also possesses the largest number of developers of any layer-1 chain.”
In this scenario, Hayes says he doesn’t envision Ethereum dropping lower than the $800-$1,000 range.
ETH is trading at $1,847 at time of writing. The second-ranked crypto asset by market cap is down nearly 3% in the past 24 hours.
The highly anticipated ETH 2.0 upgrade, currently scheduled for September 15th, will allow Ethereum’s mainnet to merge with its Beacon Chain, which would switch ETH to a proof-of-stake system. Ethereum currently utilizes a proof-of-work protocol.
The Merge aims to address the network’s scalability issues by setting the stage for future upgrades, including sharding.
Conversely, Hayes says a successful upgrade will spur an ETH rally, though he acknowledges that it may not be immediate.
“The structural reduction in inflation will only happen post-merge. I expect we will see it play out similar to Bitcoin halvings – i.e., we all know the dates they will occur, and yet, Bitcoin still always rallies post-halving.
That said, it’s possible the price of ETH dips slightly heading into and right after the merge. Those who cut partially or fully would initially feel great about their decision. However, as the deflation kicks in, and due to the reflexive relationship between a high and rising ETH price and usage of the network, the price could keep gradually grinding higher. At that point, you would have to decide when to get back into your position.”
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The post BitMEX Founder Arthur Hayes Says Crypto Traders Should Prepare To Buy Ethereum Dip – Here’s When appeared first on The Daily Hodl.
Source: https://dailyhodl.com/2022/08/18/bitmex-founder-arthur-hayes-says-crypto-traders-should-prepare-to-buy-ethereum-dip-heres-when/