In a recent report, JPMorgan has forecasted that Ethereum (ETH) is poised to outperform Bitcoin (BTC) and other cryptocurrencies in 2024. Despite the bank maintaining an overall cautious stance on the crypto markets, JPMorgan analysts, led by Nikolaos Panigirtzoglou, expressed confidence in Ethereum’s resurgence next year.
Catalyst For Ethereum’s Resurgence
The catalyst for this predicted upswing is the anticipated EIP-4844 upgrade, also known as Protodanksharding, scheduled for the first half of 2024. According to the analysts, this upgrade will significantly enhance Ethereum’s network activity and contribute to its outperformance.
Protodanksharding represents an initial step toward implementing Danksharding, a more efficient form of sharding for Ethereum. Unlike the initially planned sharding technique, Danksharding introduces data blobs—temporary data packets attached to blocks.
These data blobs can hold more information than blocks but are not permanently stored or accessed by the Ethereum virtual machine, improving the network’s overall efficiency.
JPMorgan highlighted the advantages of this upgrade for Layer 2 networks like Arbitrum and Optimism, as it provides additional temporary data space to boost network throughput and reduce transaction fees. Importantly, this enhancement is achieved without altering the Ethereum block size.
In contrast, JPMorgan analysts are less optimistic about Bitcoin’s prospects in the coming year. Factors traditionally considered bullish for Bitcoin, such as the potential approval of spot ETFs and the upcoming halving, are already priced in.
Drawing on historical trends, the analysts pointed out that Bitcoin’s market price-to-production cost ratio decreased after the 2020 halving, suggesting a similar move after the 2024 halving is plausible.
The report also highlighted the “biggest disappointment” in decentralized finance (DeFi). JPMorgan analysts expressed concerns about DeFi’s inability to penetrate the traditional financial system, hindering the crypto ecosystem’s transition from native applications to real-world use.
Issues such as slow tokenization evolution, fragmentation, lack of cooperation, interoperability between platforms, and delays in central banks’ digital currency introductions were cited as obstacles.
Regarding the crypto venture capital funding outlook, JPMorgan analysts noted a tentative improvement in the fourth quarter compared to a subdued earlier part of the year. They cautiously suggested that if this positive trend continues into the first quarter of 2024, it could signify the end of the “crypto winter,” marking a significant development for the industry.
Related Reading | Chainlink (Link) Drops 12% As Link V0.2 Pool Limits Signal Short-Term Impact