Ethereum (ETH) is likely to exceed $10,000 by the end of the year, said Arthur Hayes, the co-founder of crypto exchange BitMEX. He said ETH’s imminent shift to a proof-of-stake (PoS) model would make it resemble a bond, which has the potential to significantly increase its institutional appeal.
Hayes said at least a quarter of his portfolio is made up of ETH and he plans to increase his exposure ahead of the token’s highly anticipated shift. ETH last traded near $3,500, its highest level so far this year.
PoS to turn Ethereum into a bond?
The Ethereum blockchain will merge its 2.0 and 1.0 chains sometime this year, after which the token is expected to adopt a PoS mechanism – one that rewards staking rather than mining. Early forecasts show that ETH’s annual return in such a model could be as high as 11%, far exceeding anything offered by conventional debt markets, Hayes wrote in a blog post.
He expects the potential returns to attract a huge amount of institutional capital, catapulting ETH prices to new heights this year.
When the dust settles at the end of the year, I think ETH will trade north of $10,000.
Betting the token would work in the same way as putting money into a time-bound debt instrument, with both activities involving almost no risk. For institutional investors, bonds represent stable, safe returns over a long period of time.
Citing low lending rates, Hayes said it would theoretically be possible to use cheap US dollar-denominated loans to stake ETH for yield, while preserving most of the 11% bumper margin.
Since global real rates are very negative, I want to own an asset with positive returns in its home currency – and right now that’s ETH.
ETH’s Recent Rally Fueled by PoS Anticipation
The world’s second largest cryptocurrency has already seen positive price action in anticipation of its PoS shift. The token rose about 16% through March and last traded at its highest level this year, near $3500.
The PoS model is expected to nearly negate ETH’s compute and power requirements, further aligning it with regulations scrutinizing crypto’s high environmental costs. The move also makes the token more accessible to enthusiasts who don’t have the hardware to mine.
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About the author
With over five years of experience in global financial markets, Ambar plans to leverage this knowledge for the fast-growing world of crypto and DeFi. His main interest lies in finding out how geopolitical developments could affect crypto markets and what that could mean for your bitcoin holdings. When he’s not scouring the internet for the latest news, you can watch him play video games or watch Seinfeld reruns. You can reach him at [email protected]
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