Arthur Hayes predicts Ethereum will reach $5K after merge if Fed pivots

BitMEX’s founder Arthur Hayes has predicted that Ethereum’s (ETH) price could rise to $5,000 if the merge upgrade is successful and the Federal Reserve goes ahead with its pivot.

Hayes also revealed that the current price of Ethereum represents a tremendous buying opportunity for investors as it is selling 76% below his model price of $2815.

Hayes: Eth to $5000

In an August 5 post, Hayes said the Fed’s pivot toward “supporting growth rather than fighting inflation” would lead to an expansion in quantity –a situation where the Feds would have to print more money to support the economy.

In this scenario, when Ethereum Merge eventually happens in September, he believes the digital asset would be able to breach the $5000 mark as it would become a deflationary asset with high demand.

“The rate at which Ether is issued per year will be reduced by ~90% under the new PoS model … the Ether taken out of circulation will only increase as the network grows in popularity … all of these factors together should still drive the price of Ether up exponentially.”

No Fed pivot + successful Ethereum merge

In a situation where the Feds backtrack on its decision to support growth by printing more money, Hayes thinks the merge would still be able to push Ethereum’s price to $3562.

According to Hayes, the merge is expected to drive a “triple-halving’ event” for Ethereum. Since Bitcoin’s (BTC) price has always reacted positively to its halving, one can expect ETH’s price to respond similarly.

Other predictions

Hayes continued that if the Ethereum merge fails or is suspended and the Fed pivots its policies, there would not be any adverse effect on the asset price as it would still be able to maintain its current level of $1600.

However, several people would be left disappointed by the failed promises.

Explaining how he arrived at his $1600 prediction, Hayes said that Ethereum would have gone up by 1.72% without the excitement of the merge between June 17 and July 26.

So, a merge failure will drop the price to $1,099. But since there will be more liquidity from the Fed pivot, he expects ETH to eventually rise as it did between March 2020 and 2021 when “the Fed expands the money supply once more.”

Meanwhile, in a scenario with no Fed pivot and Ethereum Merge fails, Hayes predicted that ETH would likely return to its July 17 low of $1,081.