The general market sentiment and further losses in crypto markets could cause Ethereum to re-test the support zone. This rally has seen Solana (SOL) and Avalanche(AVAX) leading the charge, which is second in market capital.
Arthur Hayes’ Crystal Ball Predicts: Ethereum To 5 Digits| Arthur Hayes’ Crystal Ball Predicts: Ethereum To 5 Digits
Ethereum will likely continue to be the dominant market player in the next months. According to some experts, such as former BitMEX CEO Arthur Hayes, ETH’s price could outshine its layer-1 competitors.
At the time of writing, ETH’s price trades at $3,400 with a 2% loss in the last 24-hours.
Hayes’ support his bullish thesis for Ethereum on “The Merge”. The upcoming ETH 2.0 upgrade that will combine the network’s execution layer with its consensus layer.
This will consolidate ETH’s migration into a Proof-of-Stake consensus algorithm. In addition to Hayes, Bloomberg Intelligence Senior Commodity Analyst Mike McGlone believes the event will be bullish for ETH’s price.
The analyst believes ETH is about to “change the rules of the game”. The Merge will make ETH a financial asset that combines commodity, equity and monetary characteristics.
Using a discounted cash-flow model on ETH, the analyst concluded that it’s currently undervalued. McGlone thinks the cryptocurrency may break beyond $6,000 and offer 110% upside potential.
You can see below a diagram showing the discounted cashflow model. Investors will benefit from the upcoming ETH staking system.
Ethereum Is About to Change The Game
McGlone looked into ETH’s transaction fees since its inception in 2015. The second cryptocurrency by market capital has experienced an increase in transaction costs. This suggests an increase in activity and demand for block space. It also indicates more adoption.
Ethereum may continue this trend into 2035. At this time, the analyst expects it to reach a “decay to a terminal growth rate” after a 30% annual rise in transaction fees or cash flow until 2025. This calculations are “conservative, the expert said.
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ETH’s long-term prospects could be as good as $9,000. This is a 219% rise in upside. McGlone stated the following to highlight the potential of ETH in the upcoming Merge.
While delays or bugs with the Merge might have a negative effect, the biggest risk of revaluation lies in sub-par aggregate transaction fees growth. Once the next phase, Sharding, disaggregates the base chain into 64 individual “shards”, dramatically increasing Layer 1 blockspace, gas prices are expected to fall commensurately. This will also unlock the potential for Layer 2 rollups that can handle increasing numbers of transactions almost at no cost.