According to Arthur Hayes, co-founder of crypto exchange BitMEX, Ethereum (ETH) will certainly reach $10,000 by the end of the year. He claims thatthateth ETH’s imminent switch to a proof-of-stake (PoS) mechanism will make it look like a bond, perhaps increasing its institutional attractiveness.
Hayes claims that ETH makes up at least a quarter of his portfolio, and that he plans to expand his holdings ahead of the token’s widely anticipated move. ETH was trading near $3,500 at the time of writing, its highest level so far this year.
To make Ethereum a bond, will PoS be used?
The Ethereum blockchain’s 2.0 and 1.0 chains are planned to join later this year, after which the currency is likely to adopt a PoS method, which rewards staking rather than mining. According to Hayes, initial predictions reveal that ETH’s annual returns under such a scheme may be as high as 11%, far greater than anything offered by traditional debt markets.
He believes that the prospective returns will attract a large quantity of institutional capital, causing ETH prices to soar this year to new highs.
Staking in the token would work in a similar way to investing in a time-bound debt instrument, with essentially negligible risk in both. Bonds represent consistent, reliable returns over a long period of time for institutional investors.
Due to low borrowing rates, Hayes believes it is potentially conceivable to leverage low-cost US dollar loans into staking ETH for profits while still keeping the majority of the 11% margin.
The recent spike in ETH has been fueled by the prospect of a proof-of-stake system.
In anticipation of its PoS switch, the world’s second-largest cryptocurrency has already experienced positive price activity. Through March, the token gained roughly 16 percent, and it was last trading near $3500, its highest level this year.
The PoS mechanism is projected to nearly eliminate ETH’s computing and energy requirements, putting it even closer to regulations that are concerned about crypto’s high environmental cost. This makes the token more accessible to enthusiasts who do not have the necessary hardware to mine it.
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