Nick Chong · 1 week ago · 2 min read · Insights via Grayscale Investments
Ethereum holders may be holding their breath for an impending market bottom, but BitMex CEO Arthur Hayes has dubbed the second-largest cryptocurrency by market capitalization a “double-digit sh*tcoin” destined for sub-$100 levels.
Making the colorful description in BitMex’s newsletter, Crypto Trader Digest, Hayes used his typically unrestrained voice to argue why Ether’s success in 2017 may have been unsustainable.
The candid newsletter comes in the midst of a market-wide selloff; yet, Hayes would appear to weigh honesty over soothing the worries of BitMex clients.
Ethereum, reverting to September 2017 prices, is currently down 80 percent from its all-time high in January 2018.
VCs To Blame
To Hayes, 2017’s feverous wave of initial coin offerings artificially propped up the price of Ether.
Pointing the finger at “jealous” venture capitalists, he highlighted how their support, and even orchestration, of known “sh*tcoin” projects may have prepared ETH for an eventual collapse. According to the former CitiGroup trader:
“Jealous, traditional VCs transformed portions of their funds into poorly designed hedge funds so that they too could punt sh*tcoins. Everyone piled into the same deals, all thinking they ‘got it.’ That worked well all of 2017.”
Later, Hayes explained how controversial “pump-and-dump” schemes are the direct consequence of immature hedge fund partners. He also added that they are not psychologically equipped to deal with seeing their investments in the red, causing them to liquidate holdings in an irresponsible manner. He surmised:
“They don’t have the mental strength to cut positions to limit further losses, or back up the truck and buy opportune dips even though they are down. … 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.”
While Hayes may believe Ethereum’s success will be short-lived, he confessed to not knowing when the bubble would burst.
He did, however, remain steady on his prediction that Bitcoin will find a bottom somewhere in the realm of $5,000—the price where mining will no longer be profitable for “the average miner.”