Friday, December 9, 2022
 

Arthur Hayes: ETH Will Skyrocket After The Merge If This Scenario Happens

  • Arthur Hayes thinks that following The Merge, the price of Ethereum could skyrocket.
  • If all goes according to plan on September 15, Hayes says that this will create a positive feedback cycle.
  • A few days ago, Hayes predicted that the price of Ethereum (ETH) may reach $5,000 after The Merge.

BitMex ex-CEO Arthur Hayes tweeted out what he thinks is a fascinating discovery concerning the current Ethereum (ETH) futures term structure. Firstly, he said that the curve is in backwardation, with futures being below the spot price until January 23. His  best assumption is that this is because investors are reducing their ETH exposure in anticipation of the upcoming merge.

Ethereum Futures Term Structure

The former BitMex chief added that if the marginal pressure is on the sell side, then the market makers are likely long futures and will need to short-sell spot in order to protect themselves from potential losses. The cash or spot market has further downward pricing pressure as a result of this.

He proceeded to say that now that the pressure is on the buy side, market makers who are short futures are being forced to go long spot. A reversal of the positions they have before the merge.

If all goes according to plan on September 15, Hayes says that this will create a positive feedback cycle that will result in higher spot prices.

Recall that just a few days ago, Hayes speculated that the price of Ethereum may reach $5,000 in the event that the merge upgrade is implemented successfully and the Federal Reserve follows forward with its decision to prioritize economic growth above containing inflation. This would necessitate an increase in money supply, forcing the central bank to create more money to keep the economy afloat.

“The rate at which Ether is issued per year will be reduced by ~90% under the new PoS model… the Ether taken out of circulation will only increase as the network grows in popularity,” Hayes said. “All of these factors together should still drive the price of Ether up exponentially.”

  • Arthur Hayes thinks that following The Merge, the price of Ethereum could skyrocket.
  • If all goes according to plan on September 15, Hayes says that this will create a positive feedback cycle.
  • A few days ago, Hayes predicted that the price of Ethereum (ETH) may reach $5,000 after The Merge.

BitMex ex-CEO Arthur Hayes tweeted out what he thinks is a fascinating discovery concerning the current Ethereum (ETH) futures term structure. Firstly, he said that the curve is in backwardation, with futures being below the spot price until January 23. His  best assumption is that this is because investors are reducing their ETH exposure in anticipation of the upcoming merge.

Ethereum Futures Term Structure

The former BitMex chief added that if the marginal pressure is on the sell side, then the market makers are likely long futures and will need to short-sell spot in order to protect themselves from potential losses. The cash or spot market has further downward pricing pressure as a result of this.

He proceeded to say that now that the pressure is on the buy side, market makers who are short futures are being forced to go long spot. A reversal of the positions they have before the merge.

If all goes according to plan on September 15, Hayes says that this will create a positive feedback cycle that will result in higher spot prices.

Recall that just a few days ago, Hayes speculated that the price of Ethereum may reach $5,000 in the event that the merge upgrade is implemented successfully and the Federal Reserve follows forward with its decision to prioritize economic growth above containing inflation. This would necessitate an increase in money supply, forcing the central bank to create more money to keep the economy afloat.

“The rate at which Ether is issued per year will be reduced by ~90% under the new PoS model… the Ether taken out of circulation will only increase as the network grows in popularity,” Hayes said. “All of these factors together should still drive the price of Ether up exponentially.”

 

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