Ethereum

Ethereum Price Could Break Through The Merge, According To Arthur Hayes

According to BitMEX creator Arthur Hayes, Ethereum’s (ETH) forthcoming transition to a proof-of-stake consensus method will enhance its price.

Ethereum Price Could Break Through The Merge, According To Arthur Hayes 4

In a new blog post, Arthur Hayes predicts that Ethereum‘s price will rise following its upgrade, despite unfavorable US dollar (USD) liquidity conditions.

According to Hayes, the Federal Reserve can keep fighting inflation by hiking interest rates without harming the markets as long as the USD Liquidity Conditions Index grows, a gauge he created that correlates with Bitcoin (BTC).

“If the quantity of money has a greater effect than its price on financial markets, then the Fed can raise interest rates all it wants without hurting the market – so long as the USD Liquidity Conditions Index also rises.”

Hayes’ USD Liquidity Conditions Index is calculated by subtracting the total amount of New York Federal Reserve reverse repo bids as well as the US Treasury general account balance held at the NY Fed from the Fed’s overall balance sheet.

Ethereum Price Could Break Through The Merge, According To Arthur Hayes 5

Hayes, on the other hand, argues that rough macroeconomic conditions aren’t shaking his faith in the dominant smart contract platform, but that price action may be less than he expected.

“I think the Merge will drive positive price movement for ETH regardless of USD liquidity conditions.
I still believe that the positive price impact of a severe reduction in ETH emissions and the positive reflexivity between the price/network activity/network usage would overcome any situation in which USD Liquidity Conditions are tightening – it’s just that the price movement might be weaker than I forecasted or hoped for.”

At the time of writing, ETH is trading at $1702.

ETH daily chart. Source: CoinCu

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Harold

CoinCu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.