- JPMorgan anticipates that Ether will outperform Bitcoin and other cryptocurrencies in 2024.
- Analysts believe that Ethereum will prove itself and regain market share within the crypto ecosystem next year.
- JPMorgan analysts state that positive factors expected for Bitcoin in the coming year, such as the possible approval of spot ETFs and the upcoming halving, are already priced in.
According to the latest assessments by JPMorgan analysts, Ethereum is expected to outperform Bitcoin in 2024: Details of the report!
Ethereum Could Surpass Bitcoin in 2024
JPMorgan expects Ether to outperform Bitcoin and other cryptocurrencies in 2024, but the bank maintains a generally “cautious” stance on crypto markets for the next year.
In a note published on Wednesday, analysts led by JPMorgan’s head strategist Nikolaos Panigirtzoglou stated, “We believe that Ethereum will prove itself again next year and regain market share within the crypto ecosystem,” and added, “The main catalyst is the EIP-4844 upgrade or Protodanksharding, and this upgrade is expected to take place in the first half of 2024. We believe this upgrade will be a bigger step in improving Ethereum network activity, which will help Ethereum’s performance.”
Protodanksharding is an initial step toward the full implementation of Danksharding, a more efficient form of sharding for Ethereum. Unlike the initially planned sharding technique, Danksharding prevents a complex process of splitting Ethereum into multiple shard chains. Instead, it introduces data blocks containing temporary data packets added to blocks, which can hold more data than blocks but are not permanently stored or accessible by the Ethereum virtual machine.
According to JPMorgan analysts, the upgrade is particularly beneficial for Layer 2 networks like Arbitrum and Optimism, as it provides additional temporary data space to increase the transition of Layer 2 networks in Ethereum and reduce transaction fees for Layer 2 networks in Ethereum. Essentially, data blocks increase the efficiency of Layer 2 networks without changing the Ethereum block size.
Bitcoin Halving Already Priced In
JPMorgan analysts claim that positive factors expected for Bitcoin in the coming year, such as the possible approval of spot ETFs and the upcoming halving, are already priced in. The analysts noted that after the 2020 halving, the market price of Bitcoin compared to production costs decreased, and a similar movement would be reasonable after the 2024 halving.
“And considering that the current Bitcoin price to production cost ratio is approximately x2.0, this means that the 2024 Bitcoin halving event is largely priced in,” concluded the analysts.
DeFi’s ‘Biggest Disappointment’
According to JPMorgan analysts, the “biggest disappointment” of decentralized finance (DeFi) is its failure to enter the traditional financial system, which is necessary for the transition of the crypto ecosystem from crypto-native to real-world applications.
Analysts stated, “The most prominent applications of blockchain applications in traditional finance, such as overnight repo transactions through smart contracts on blockchain platforms hosted by companies such as Broadridge and JPMorgan, occur outside of public blockchains.” Additionally, tokenization is evolving “quite slowly” and remains “generally experimental” due to factors such as a lack of a broad framework, lack of collaboration, lack of cross-platform cooperation, delays in the introduction of central bank digital currencies by the Fed and ECB, and regulatory gaps.
Crypto VC Funding Outlook
Venture capital funding in the crypto space improved in the fourth quarter of this year compared to the rest of the year, but according to JPMorgan analysts, this improvement looks “quite cautious.” The analysts said, “If this improvement continues into the first quarter, it would represent a significant development heralding the end of the crypto winter, in our view.”
