Why did (smart)people expect Yields to go up post merge?

Staking is a dynamic, self balancing system, the more people stake, the smaller the yield per person. Ethereum exist in a global competitive landscape, where anybody with capital tries to find a place with minimum risk and maximum reward.

Pre merge, the market agreed the risk/reward ratio for staking was around 5%. Yields ended up around this equilibrium. After the merge, there was more money for stakers, but the risk is still the same. Obviously, more money would flow into staking, thus push down the yields to the same levels as before.