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BitMEX CEO Arthur Hayes does not afraid to make predictions. The former banker turned crypto enthusiast notably predicted that Bitcoin would reach to $50,000, but not before it would pass through a bottom of $5,000. Now, Hayes has some forecasts regarding Ethereum (ETH)trade, the second largest cryptocurrency as well; and those projections are quite ominous ones.
In the company’s newsletter, “BitMEX Crypto Trader Digest,” Hayes essentially argues through an anecdote that since 2017 until early 2018 the price of Ethereum had been propped up by venture capitalists and initial coin offerings; consequently, Hayes forebodes, when these VC investors will commence mass selling of their ETH holding, this will knock Ethereum below the $100 mark.
The VC investor who has never suffered the vagaries of the market is as green as the noob who thinks he or she can go from 1 to 100 Bitcoin in a few trading days. They don’t have the mental strength to cut positions to limit further losses, or backup the truck and buy opportune dips even though they are down. More importantly, LPs can now see an objective last price for a particular token, and can’t be hoodwinked. They will attempt to be a Monday morning quarterback, and that only adds to the VC investors’ anxiety. At a certain point, they go “fuck it”, and dump everything they can.
It is this moment, that Ether goes from a 3-digit to a 2-digit shitcoin.
Just in case someone somehow managed to miss Hayes’ point, the term “shitcoin” was certainly a nice touch.
Hayes carries on and elaborates that a domino effect which will begin with disposing Ethereum-based tokens (aka ERC-20) by VCs who will be forced to sell concurrently because everybody else is selling too, will ultimately turn Ethereum into a corpse. Yup.
The herd of token VC punters will all decide to sell at the same time. If you don’t sell, and the market continues falling, you lose your job. So everyone sells simultaneously but who can eat all that shit? Retail cannot because the deals would never have gotten so large without institutional money. So we gap lower, first on tokens, then on the mothership Ether.
I don’t know what that tipping point will be, but in hindsight, it will be obvious when the capitulation occurs. There are those who believe that a sustainable token economy can exist. But they won’t be buying at these levels. Sub-$100 takes us back to Spring 2017 levels. At those depressed prices, the carrion is ripe for ingestion.
One thing you can’t take away from Hayes – he doesn’t cut back on the imagery.
Yet, in spite of the bombastic depictions, Hayes does raise a speculation that seems to become more and more accepted: VCs and ICOs cash out their token holding en masse – whilst ICO tokens are chiefly Ethereum’s ERC-20-compliant – which inevitably pushes the ETH price forcefully down. Hayes surmises that it will sequentially fall below $100.
Right now (August 16) ETH is trading at around $290, so a decline to double digits will be at least an additional 65% crash from these current levels – which are already the lowest since November 2017. That’s some grim projection.