Ethereum (CRYPTO: ETH) is up 25% on the week and could extend its rally even further, with Maelstrom’s Arthur Hayes pointing to an attractive risk-reward setup.

Can Positioning, Liquidity Sustain The Rally?

Hayes, Chief Investment Officer of Maelstorm, told Laura Shin on the Unchained podcast on Aug. 20 that Ethereum is his largest cryptocurrency position outside of Bitcoin (CRYPTO: BTC).

His bullish thesis has more to do with market positioning and liquidity.

Hayes expects U.S. Treasury actions, an eventual expansion of the Federal Reserve’s balance sheet and similar monetary policies globally to inject additional liquidity into financial markets.

Bitcoin and Ethereum should be among the primary beneficiaries, he argued.

ETH’s bearish sentiment has left investors underexposed while it remains liquid enough for institutional investors and large funds to establish significant positions.

Hayes called Ethereum the "most hated" large-cap cryptocurrency but sees that underperformance as an attractive risk-reward opportunity.

Why Hayes Doesn’t Care About Tech

Hayes said his investment thesis does not hinge on Ethereum’s Layer-2 roadmap, Ethereum Foundation decisions, technology or tokenomics.

The altcoin remains the world’s second-largest cryptocurrency but has yet to reclaim its 2021 all-time high. This leaves significant room to catch up after lagging this cycle and potentially revisit the $4,800 level reached a year ago.

Hayes expects the trade to become increasingly reflexive once momentum builds, as underexposed investors rush back into ETH.

He maintained his $5,000 year-end price target, arguing Ethereum could reach that level quickly after clearing key resistance.

Hayes additionally sees Ethereum potentially serving as a security layer for tokenized real-world assets, although that remains secondary to his macro thesis.

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