Jason Yanowitz argues the Ethereum Merge will be Ethereum's biggest catalyst yet, similar to how the 2020 Bitcoin halving and Fed money printing pushed Bitcoin to $65,000. The Merge makes Ethereum deflationary, yield-generating, and ESG-compliant by switching to proof-of-stake, positioning it as the reserve asset of a crypto-based financial system.
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In March 2020, as COVID shook markets around the world, the Fed kicked off on the greatest money printing campaign that we've ever seen. Over the next 12 months, the percentage of US dollars that would be printed would be an incredible amount, and this would coincide with a huge Bitcoin catalyst, the Bitcoin halving. The Bitcoin halving cut the supply rate of Bitcoin in half in May of 2020. Just one month later, June of 2020, Paul Tudor Jones would call Bitcoin the fastest horse in the race, and that would kick off a huge wave of institutional buyers, sending the price of Bitcoin soaring to $65,000. Here we are 2 years later, and a very similar environment is shaping up for Ethereum. The Ethereum Merge is going to be the greatest catalyst for Ethereum that we've ever seen for 3 reasons. Number 1, the Merge transitions Ethereum from an inflationary asset to a deflationary one. Number 2, it transitions Ethereum from a kind of dead asset into a yield-generating asset. Number 3, it satisfies ESG mandates that institutions have set out for investing by transitioning Ethereum from a proof-of-work asset to a proof-of-stake asset. Now, when you take into consideration that the Fed is going to start decelerating tightening, that makes Ethereum a very exciting asset for the second half of this year. What we have here is actually a chart of the total number of crypto users overlaid with the total number of internet users. So a really interesting chart to show because you can actually see the growth of the crypto users pretty much growing at an identical rate as the number of internet users over the last several years. With the ETH merge and current macro situations unfolding as they are, I would argue that we start breaking out from this growth pattern And what becomes abundantly clear is that the future of finance is going to be built on crypto rails. And because of the Ethereum merge, Ethereum is clearly set up to become the reserve asset of that system. I'm Jason Yanowitz, co-founder of Blockworks.
