Analysts at the world's largest bank expect ethereum (eth) to outperform bitcoin (btc) next year amid a critical network upgrade for the former and a wildly disappointing ETF launch for the latter.
In a report released Wednesday, JPMorgan argued that ethereum's upcoming “Protodanksharding” upgrade (EIP-4844) will help bolster network activity after a lull during which Ether (eth) underperformed others. cryptocurrencies.
The imminent return of ethereum
Protodanksharding, scheduled for April, marks a preliminary step before the full implementation of “danksharding,” a scaling technique that will bolster ethereum's Layer 2 networks with higher transaction throughput and lower fees.
“We expect ethereum to outperform bitcoin and other cryptocurrencies next year, helped by the upcoming EIP-4844 or Protodanksharding update,” analysts led by Nikolaos Panigirtzoglou wrote in a report shared with CryptoPotato.
The prediction echoes that of British banking giant Standard Chartered in October, which predicted an eth price of $8,000 by 2026, in part due to technical upgrades such as danksharding.
So far, JPMorgan has described ethereum network activity as disappointing. Since its update in Shanghai in April, activity has not seen a significant resurgence beyond staking, despite the resurgence of DeFi and NFTs on other networks.
One such alternative network is bitcoin, which is gaining traction as a new platform for NFTs and tokenization thanks to its recently popularized Ordinals protocol. At peak times, transaction fees charged by bitcoin have begun to unusually rival those of ethereum.
bitcoin vs. ethereum
By price action, btc is up 158% so far this year, while eth is up 90%. However, according to JPMorgan, the former's outperformance is not expected to last, despite major events ahead that are expected to catalyze further gains.
“Excessive optimism from cryptocurrency investors stemming from an impending approval of bitcoin spot ETFs by the SEC has driven bitcoin to the overbought levels seen throughout 2021,” the analysts argued.
Although many claim that a series of bitcoin ETF approvals may attract more institutional capital to btc, the bank believes that capital will simply shift from existing bitcoin investment vehicles: Grayscale, futures ETFs, mining companies and others. .
As for the bitcoin halving in April, JPMorgan says the event is already discounted based on the current cost of producing btc for miners.
“Given that the current ratio between bitcoin price and production cost is around x2.0 right now, this would imply that the 2024 bitcoin halving event is largely in price,” the analysts wrote.
Binance Free $100 (Exclusive): Use this link to sign up and receive $100 free and 10% off fees on Binance Futures for the first month (terms).
<!– ai CONTENT END 1 –>