BitMEX CEO Arthur Hayes: Ether Will 'Test' $200 When ICOs 'Return'

Omar Faridi
  • BitMEX CEO Arthur Hayes has predicted that ether (ETH) price will "rebound aggressively."
  • Hayes believes ether's price will recover once the initial coin offering (ICO) market comes back in the next 18 months.

Arthur Hayes, the co-founder and CEO of BitMEX, the world’s largest cryptocurrency derivatives trading platform, recently predicted that the price of Ethereum’s native token, ether (ETH), will “rebound aggressively.”

Hayes, who previously worked at Deutsche Bank and as head trader at Citi, told Cointelegraph Japan that the main use case for Ethereum is to use its blockchain network to launch initial coin offerings (ICOs). However, Hayes noted that the ICO market is “dead” right now and that it will likely return within “18 months.”

Hayes: Ether Could “Quickly Test” $200

Explaining how the price of ether could recover, the Wharton Business school graduate remarked:

The use case for Ether is primarily ICOs. That market is dead right now … Once there are new issues (ICOs), then ether will rebound aggressively. When the ICO market returns, ether will quickly test $200. The timing of the ICO rebirth is 12 to 18 months out.

As CryptoGlobe reported in mid-August, Hayes called ether a “shitcoin” as its price had mostly been pumped by speculative venture capitalists and ICO projects. At the time, ether’s price dropped below the $300 mark and Hayes said the companies and inexperienced investors that invested in the cryptocurrency and/or ERC-20 tokens would likely dump their holdings as they would not be able to stomach more losses.

Notably, the price of ETH has since dropped below $100 as Hayes predicted it would, but has now recovered and the token is trading at around $130.

Security Tokens & Stablecoins

In his recent interview, Hayes also predicted that stablecoins will be dominating the cryptoasset markets before the ICO market comes back (in the next 12-18 months). The BitMEX co-founder noted:

Security tokens and stablecoins will prove attractive sirens for investors in 2019. While their fundamental raison d'etre is flawed, investors in this time of pain will latch onto anything they believe will be their ticket to easy riches.

As covered by CryptoGlobe in November, Asher Tan, the founder of Australia-based crypto exchange, Coinjar, has predicted that stablecoins would be the “next big thing.” Tan, who launched Coinjar in 2013 along with computer scientist Ryan Zhou remarked:

The interesting thing right now, what's on everyone's lips … [are] stablecoins … It's a craze right now … It helps you transfer money around the crypto ecosystem at a stable rate. But there's a whole lot of applications or use-cases that could come out of it.

Tan also revealed there are now an increasing number of software engineers, economists, and traditional investors who have started to take more interest in stablecoins. Commenting on active involvement of a relatively large number of players in the development of USD-pegged coins, Tan noted "these are things that usually only a central bank would have thought about five years ago, and now you've got tech start-ups looking at economics, and how can you peg a currency to a token."

Vitalik Buterin Proposes Using Bitcoin Cash As Data Layer for Ethereum

Ethereum (ETH), the world’s largest platform for building and deploying decentralized applications (dApps), is currently facing significant scalability problems. This, as the size of the Ethereum blockchain has grown much larger than what the project’s founders may have anticipated - when the smart contract platform was first launched around five years ago.

Bitcoin Cash (BCH) May Serve As Data Layer for Ethereum?

In order to address Ethereum’s scalability challenges, Vitalik Buterin, the Co-Founder of Ethereum, suggested using blockchain networks that have relatively lower transaction fees.

Buterin argued that Ethereum could leverage smaller blockchain-based platforms by using them as a data layer. According to Buterin’s assessment, Bitcoin Cash (BCH) may “fit the bill perfectly” as it has a relatively high data throughput rate.

Bitcoin Cash Blockchain’s Throughput Rate Is Almost 7x Greater than Ethereum

Currently, the Bitcoin Cash blockchain can process around 32 MB of data in roughly 600 seconds, which is equivalent to about 53,333 bytes/second. This is almost 7x faster than Ethereum’s processing capacity - as the leading smart contract platform can only handle around 8 kilobytes (8,000 bytes) per second.

While the Bitcoin (BTC) blockchain may have the highest level of security, transaction fees on its network might be too high for it to be practically used as a data layer. Meanwhile, the Bitcoin Cash network may be more suitable for data processing as its transaction fees are considerably lower (at present) than most major crypto networks.

Might Be Easy to Validate BCH Blocks Inside Ethereum

Online tools such as BTCRelay may allow developers to easily verify Bitcoin Cash blocks inside of the Ethereum network. According to Buterin, the tool would just have to be repointed toward the Bitcoin Cash blockchain, in order to validate transaction data. The BCH network appears to be well-suited for this process due to its low transaction fees.

Although the BCH network may seem ideal as a data layer, Buterin noted that the cryptocurrency’s 10 minute block times may be considered its biggest weakness. However, the Russian-Canadian programmer believes this issue may be resolved in the forseeable future.

Ethereum Classic Blockchain May Be “Another Natural Alternative”

Notably, Buterin said that the Ethereum Classic (ETC) blockchain might be “another natural alternative”, however it’s not as scalable when compared to the Bitcoin Cash network.

As noted by Buterin: 

There’s a large space of quite powerful and effective scalability solutions that rely on a non-scalable computation layer (ie. the current ethereum chain suffices) plus a scalable data layer.

By using “interactive” computation techniques, like Truebit, developers are able to compute the current state on “the Ethereum side.” This process depends on the “data availability verification guaranteed by the data layer”, which ensures that “fraudulent” submissions can be “detected and heavily penalized”, Buterin wrote on the EthResearch forum website.

A Temporary Solution Until Ethereum 2.0 Is Launched

He also clarified that potentially using Bitcoin Cash or Ethereum Classic as data layers would be a short-term or temporary solution. This, as Ethereum 2.0, a major system-wide upgrade, will be released in order to improve the overall efficiency of the world’s largest dApp development platform.