JPMorgan Ethereum will surpass Bitcoin in 2024.

JPMorgan Predicts Ethereum to Overtake Bitcoin by 2024

JPMorgan predicts that by 2024, Ether will surpass Bitcoin and other cryptocurrencies, thanks to the introduction of EIP-4844 upgrade and Protodanksharding technology. The halving of Bitcoin prices and the “big disappointment” in DeFi will also affect the crypto market, improving the prospects of venture capital.

Original title: JPMorgan says ether will likely outperform bitcoin next year

Original author: Yogita Khatri

Original source: theblock

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Translated by: Kate, Huoxing Finance

Highlights

• JPMorgan analysts suggest that by 2024, Ether’s performance may surpass Bitcoin and other cryptocurrencies.

• This prediction is made after the upgrade of Ethereum EIP-4844 next year.

JPMorgan expects that Ether will outperform Bitcoin and other cryptocurrencies in 2024, although the bank remains “cautious” about the overall crypto market for the next year.

“We believe that Ethereum ETH will re-establish its position next year and regain market share in the crypto ecosystem,” wrote JPMorgan analyst Nikolaos LianGuainigirtzoglou in a report on Wednesday. “The main catalyst is the EIP-4844 upgrade or Protodanksharding, which is expected to take place in the first half of 2024. We believe that this upgrade could take a bigger leap towards improving Ethereum’s network activity and help Ethereum perform well.”

Protodanksharding is the first step in the full implementation of Danksharding, a more efficient form of Ethereum sharding. Unlike the originally planned sharding technique, Danksharding avoids the complex process of dividing Ethereum into multiple shard chains. Instead, it introduces data block blobs, temporary data packages attached to blocks, which can accommodate more data than blocks but are not permanently stored or accessed by the Ethereum virtual machine.

JPMorgan analysts reiterated that this upgrade is particularly beneficial for second-layer networks like Arbitrum and Optimism, as it provides additional temporary data space to improve network throughput and reduce transaction costs for Ethereum’s second-layer networks. Essentially, data blobs enhance the efficiency of second-layer networks without changing the Ethereum block size.

Bitcoin halving already priced in

JPMorgan analysts state that factors that are viewed favorably for Bitcoin next year, such as the potential approval of spot ETFs and the upcoming halving, are already reflected in the price.

An analyst mentioned that after the halving in 2020, the ratio of Bitcoin’s market price to production cost decreased, and it is reasonable to take similar measures after the halving in 2024.

The analyst concluded: “Given that the current ratio of Bitcoin price to production cost is about x2.0, this means that the Bitcoin halving event in 2024 will mainly be reflected in the price.”

“The Biggest Disappointment” of DeFi

JPMorgan analysts stated that the “biggest disappointment” of decentralized finance is still its inability to penetrate the traditional financial system, which is necessary for the transition of the crypto ecosystem from native crypto to real-world applications.

The analyst stated: “The biggest application of blockchain in the traditional financial sector, which is overnight repurchase transactions through smart contracts on blockchain platforms hosted by companies like Broadridge and JPMorgan, happens outside of the public blockchain.” In addition, the development of tokenization is “quite slow” and it is still “largely experimental, hindered by fragmentation, lack of collaboration and interoperability between platforms, delays in the launch of central bank digital currencies by the Federal Reserve and the European Central Bank, and lack of regulation,” they added.

Outlook for Cryptocurrency Venture Capital

Although the venture capital financing in the cryptocurrency field in the fourth quarter of this year has improved compared to the rest of the year, according to JPMorgan analysts, this improvement is “quite temporary.”

The analyst stated: “Having said that, if this improvement continues into the first quarter of 2024, it would be a significant progress and in our view, it would signal the end of the cryptocurrency winter.”

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