JPMorgan Predicts Ether to Outperform Bitcoin in 2024
In a note released on Wednesday, JPMorgan analysts led by Nikolaos Panigirtzoglou stated that they expect Ethereum (ETH) to outperform Bitcoin and other cryptocurrencies in 2024. The main catalyst for this expected outperformance is the EIP-4844 upgrade, also known as Protodanksharding, which is anticipated to take place in the first half of 2024.
Protodanksharding is an initial step toward the full implementation of Danksharding, a more efficient form of sharding for Ethereum. This upgrade is expected to significantly improve Ethereum network activity, thus helping Ethereum to outperform other cryptocurrencies.
Furthermore, the upgrade is particularly beneficial for Layer 2 networks like Arbitrum and Optimism, as it provides an additional temporary data space to increase network throughput and reduce transaction fees for Layer 2 networks on Ethereum.
In contrast, JPMorgan analysts stated that factors that are seen to be bullish for Bitcoin next year, including the possible approval of spot ETFs and the upcoming halving, are already priced in.
Despite the positive outlook for Ethereum, JPMorgan analysts expressed disappointment in the decentralized finance sector’s inability to encroach into the traditional financial system, which is necessary for the crypto ecosystem to transition from crypto-native to real-world applications. They also mentioned that tokenization is evolving rather slowly and remains at a largely experimental stage.
Regarding crypto venture capital (VC) funding, JPMorgan analysts noted that while the fourth quarter of this year has seen an improvement compared to the rest of the year, the improvement appears “rather tentative.” They suggested that continued improvement in VC funding into the first quarter of 2024 would represent a significant development and potentially signal the end of the crypto winter.
Historically, Ethereum has been a major player in the cryptocurrency space, known for its smart contract functionality and decentralized applications. The EIP-1559 upgrade in 2021 made significant changes to Ethereum’s fee market, which led to a reduction in gas fees and the introduction of a deflationary mechanism. These upgrades have positioned Ethereum as a frontrunner in the blockchain space.
In conclusion, JPMorgan’s prediction of Ethereum outperforming Bitcoin and other cryptocurrencies in 2024 highlights the bank’s optimism for the future of the Ethereum network and its potential to lead the crypto market. As the crypto industry continues to evolve, the performance of Ethereum and Bitcoin will be closely watched by investors and enthusiasts alike.
