Arthur Hayes, the co-founder and former CEO of cryptocurrency exchange BitMEX, is betting big on the price of Ether (ETH). In a Friday Medium blog post, Hayes noted that the cryptocurrency would sell high by the end of 2022.
“…if we think about the most liquid large-cap coins, which one should we favor over the others? The underlying assumption is that we should favor concentration more than diversification at this monetary transition point. And as a concentrated bet, I shall argue that between now and year-end, Ether will yield the best return,” he wrote.
Hayes Believes Merge Would Pump Ether’s Value
The BitMEX co-founder believes that if the Merge takes place this year as planned, it “will have an incredibly powerful impact on the price of ETH.”
Set to happen by September, the Ethereum Merge is a significant upgrade that involves the transition of the Ethereum network from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS).
Developers say the Merge will allow Ethereum users to validate transactions based on the amount of ETH they stake in the network. The more coins a validator stakes, the higher the chances of being selected to validate transactions and earn rewards in return.
The Merge Will Help Reduce ETH Supply
According to Hayes, staking ETH means that some of the coins will be locked up and removed from the market. He noted that since rewards are also being earned in ETH, validators will likely stake these rewards as well to earn from it, hence locking up more coins.
The former BitMEX CEO further added that under the PoS mechanism, the rate at which ETH is issued will be reduced by 90 percent. A percentage of Ether in the form of gas fees would also be burned (permanently removed from circulation.)
Hayes believes these three factors could lead to a “rapidly reducing supply of Ether,” which would, in effect, increase the price of the crypto asset.