From calling Ether “a double-digit shitcoin” to wishing he had bought some in the pre-sale, Hayes has come a long way and is very bullish on the “most developed, decentralized smart contract network” and DeFi.
Arthur Hayes, the co-founder of crypto derivatives exchange BitMEX is big-time bullish on Ethereum, saying he wishes he had bought some ETH in the pre-sale when it was sold for about 30 cents in 2014.
This week, Ether hit a new all-time high at $2,500.
This is a big shift from calling Ether “a double-digit shitcoin,” which, in his favor, he admits to.
“One of the best writers in the space. Also the most successful market maker/manipulator,” commented trader and investor Tetranode, who is extremely bullish on Ethereum. “The double-digit shitcoin was just a phase. Soon all will understand the method in the madness,” he added.
Ethereum, Hayes goes on to say, though imitating Bitcoin like the majority of the projects does in the crypto space, it “offered a substantial improvement by creating a virtual decentralised computer that greatly expands the potential use cases for the technology underlying Bitcoin.” BTC -8.30% Bitcoin / USD BTCUSD $ 56,210.51
-$4,665.47-8.30% Volume 97.47 b Change -$4,665.47 Open $56,210.51 Circulating 18.69 m Market Cap 1.05 t
9 h A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion 10 h Cathie Wood’s ARK Funds Buy More Coinbase (COIN) Shares, Now Owning Just Under 1.3 Million 11 h BitMEX Co-Founder Arthur Hayes Puts Ether Moon Target Above $20,000
Hayes’ views on Ether aren’t much different from the likes of Kyle Davies, co-founder of Three Arrows Capital, who revealed on the podcast “TechnicalRoundup” that their fund is “overweight Ethereum.”
With their focus on layer one, Davie believes Ethereum is “overlooked” as everyone is focusing on the success of some other layer ones. And while some DeFi projects are moving to other platforms like BSC, “layer two is real.” Though 3AC is invested in some layer two solutions as well, Ethereum is where “a lot of innovation is still happening,” he said.
The second-largest cryptocurrency network is the base of the decentralized finance (DeFi) sector, with $60 billion in total value locked (TVL).
The goal of the DeFi movement is to have “a peer-to-peer system that moves information from point to point without a centralized, trusted gate keeper,” Hayes said.
Broken Traditional Model
Haye’s focus in his latest write-up is to determine how much upside there is left in the market right now if some decentralized crypto can replace a portion of the need for blind trust in a centralized trust cartel.
He found this out by putting the failing traditional banking business model in the limelight. The banking index all over the world has been doing poorly despite all the help that they get from governments.
“Banks who privatize profits and socialize losses haven’t managed to enrich their shareholders,” he noted. But if these banks adopted the technological improvements, they would have seen the exponential growth the technology bellwethers are recording.
A decentralized service powered by a public blockchain can actually replicate and improve upon every product and service offered by a bank that too at a lower cost on a macro scale, Hayes wrote.
Traditional banks, he says, “are destined to be service companies for a subset of relatively wealthy global Boomers,” which still got billions of dollars of fee income in that business, but it’s not a growing slice of the market.
The public paid $2.68 trillion, 2% to 3% of world GDP, to these banking institutions. On top of this, we paid audit and accountancy services $87.09 billion, which Hayes said will go to zero because of blockchain.
Ethereum & DeFi is the Way
Ethereum, today, is the most developed, used, and decentralized smart contract network. No doubt others like BSC, Polkadot, and Solana are emerging but simply put, unlike Ethereum, no has proven themselves yet.
“No other public smart contract-enabled blockchain operates at the scale of Ethereum.”
Some might argue that the gas fees are astronomical, but as Hayes says, “it is a good problem to have,” after all, “nothing in life is free, and this is doubly true in the crypto capital markets.”
This fee that incurs on every action, along with the fees charged by dapps, can actually be seen as income to those keeping the network running, just like the tax we are paying banks to use their services.
Assuming Ethereum can capture some percentage of the 5-year average earnings of banks and the big four audit firms, Hayes comes up with extraordinary numbers.
At 0.50%, the price of ETH implies a 10x price appreciation from current levels putting it above $20,000. Trader Teranode is of a similar opinion and sees Ether hitting $100k in the future.
“Eth went 80% down (400 to 80) after he called it a double-digit shitcoin. 20k, the conservative prediction in his blog post based on DeFi penetration of overall financial markets, would be an 8x from 2.5k. Both spooky and auspicious,” commented Zhu Su, CEO at Three Arrows Capital on this.
“I am very certain that DeFi can take away at least 0.50% of activity from CeFi,” wrote Hayes.
“When you take a high-level approximation that shows you will make money even when you are assuming the worst-case scenario, get long whatever the fuck you are valuing.”