Analysts for 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 published Wednesday, JPMorgan argued that Ethereum’s upcoming “Protodanksharding” (EIP-4844) upgrade will help bolster network activity after a lull period during which Ether (ETH) has underperformed other cryptos.
Ethereum’s Impending Comeback
Expected for April, Protodanksharding marks a preliminary step before the full implementation of “danksharding” – a scaling technique that will bolster Ethereum’s layer 2 networks with more transaction throughput, and lower fees.
“We are looking for Ethereum to outperform Bitcoin and other cryptocurrencies next year helped by the forthcoming EIP-4844 upgrade or Protodanksharding,” wrote analysts led by Nikolaos Panigirtzoglou in a report shared with CryptoPotato.
The prediction echoes that of British banking giant Standard Chartered in October, which forecasted an $8000 ETH price by 2026, partly due to technical upgrades like danksharding.
Until now, JPMorgan has described Ethereum’s network activity as disappointing. Since its Shanghai upgrade in April, activity hasn’t experienced a meaningful resurgence beyond staking, despite a revival of DeFi and NFTs across other networks.
One such alternative network is Bitcoin, which is gaining traction as a new platform for NFTs and tokenization thanks to its newly popularized Ordinals protocol. At times of peak activity, transaction fees collected by Bitcoin have begun to uncharacteristically rival those of Ethereum.
Bitcoin VS Ethereum
By price action, BTC is up 158% year to date, while ETH is up 90%. Yet according to JPMorgan, the former’s outperformance isn’t expected to last – despite major upcoming events that are widely expected to catalyze further gains.
“Excessive optimism by crypto investors arising from an impending approval of spot bitcoin ETFs by the SEC has shifted bitcoin to the overbought levels seen during 2021,” the analysts argued.
Though many claim a series of Bitcoin ETF approvals may invite more institutional capital into BTC, the bank believes 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 priced in based on the current cost of BTC production for miners.
“Given the current ratio of the bitcoin price to production cost is around x2.0 at the moment, this would imply that the 2024 bitcoin halving event is largely in the price,” analysts wrote.
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