BitMEX Founder Arthur Hayes Says Crypto Traders Should Prepare To Buy Ethereum Dip – Here’s When
Former BitMEX CEO Arthur Hayes says Ethereum (ETH) is likely poised for a corrective move in the coming weeks regardless of the outcome of the upcoming update.
In a new blog post, Hayes argues that if The Merge fails, the leading smart contract platform could witness a sharp price drop.
“If The Merge fails, the dumping will be swift and vicious given the market’s high expectations versus the objective reality….
There will be a negative reflexive relationship between the price and the amount of currency deflation. Or, to put it another way, there will be a positive reflexive relationship between the price and the amount of currency inflation. Therefore, in this scenario, I think traders will either go short or choose not to own ETH.
There is a reason for this relationship in that the web is the decentralized network that has been operating the longest. ETH hit a very large market cap without a merger narrative. The most popular DApps [decentralized applications] is built using Ethereum, and Ethereum also has the largest number of developers of any layer-1 chain.”
In this scenario, Hayes says he doesn’t see Ethereum falling below the $800-$1,000 range.
ETH is trading at $1.847 at the time of writing. The second-ranked crypto asset by market capitalization is down nearly 3% in the past 24 hours.
The highly anticipated ETH 2.0 upgrade, currently scheduled for September 15, will allow Ethereum’s mainnet to merge with its Beacon Chain, which will switch ETH to a proof-of-stake system. Ethereum currently uses a proof-of-work protocol.
The merger aims to solve 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, although he acknowledges it may not be immediate.
“The structural reduction in inflation will only happen after the merger. I expect we will see it play out in the same way as Bitcoin halvings – ie we know all the dates they will occur, and yet Bitcoin always rallies after halving.
That being said, it is possible that the price of ETH will fall a bit heading into and right after the merger. Those who cut in whole or in part would initially be fine with the decision. However, as deflation sets in, and due to the reflexive relationship between a high and rising ETH price and usage of the network, the price may continue to rise gradually. At that point you have to decide when to get back into your position.”
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