JPMorgan Predicts Ethereum to Outperform Bitcoin in 2024

Analysts at the American banking giant JPMorgan Chase believe Ethereum (ETH) will be a better investment choice than Bitcoin (BTC) in 2024.

JPMorgan Predicts Ethereum to Outperform Bitcoin in 2024. Photo: CNBC

Analysts at JPMorgan Chase, a leading U.S. bank, have made predictions that Ethereum (ETH) will experience higher growth volatility compared to Bitcoin (BTC) in 2024, while maintaining cautious optimism about the overall prospects of the crypto market.

Analyst Nikolaos Panigirtzoglou wrote:

“We believe that Ethereum will assert its position and regain market share in the crypto industry. The main catalyst will be the upgrade EIP-4844, expected to be implemented in the first half of 2024. We see this as a significant improvement for the Ethereum network, which will support ETH growth.”

As explained by Coin68, EIP-4844 (also known as Proto-danksharding) is an upgrade designed to enhance Ethereum's scalability by fragmenting blockchain data into smaller units called “blobs”, thereby reducing gas fees, especially with layer-2 rollup solutions like Arbitrum and Optimism.

However, the hard fork to implement EIP-4844, codenamed Dencun, has been repeatedly delayed by Ethereum developers, with the new expected timeline updated to around March or April 2024.

JPMorgan believes that positive events anticipated by the crypto investment community for Bitcoin in 2024, such as the approval of Bitcoin spot ETFs and the fourth halving event in history, have already been reflected in the price charts over the past few months, potentially not providing further positive impact.

Moreover, analysts also pointed out that following the 2020 halving event, the Bitcoin price-to-production cost ratio has decreased, and a similar scenario could repeat itself as the current ratio stands at 2.0x.

The ETH/BTC exchange rate is currently at 0.052, the lowest since June 2022, and has been on a declining trend since The Merge event in September 2022, indicating market preference for BTC over ETH, despite Ethereum's reduced supply status in December 2023.

Weekly chart of the ETH/BTC pair on Binance at 10:20 AM on 14/12/2023

Regarding the DeFi sector, JPMorgan noted that significant developments have yet to be observed, as it has not been able to penetrate traditional financial markets, conditions deemed necessary to enhance practical applications of crypto in the real world.

Additionally, the tokenization of real-world assets onto blockchains is progressing slowly, limited to individual pilot experiments conducted by major banks, lacking connectivity and interaction between platforms. The prospect of a central bank-backed digital currency (CBDC) also remains distant, as both the Fed and ECB have yet to provide regulations for recognition and supervision of crypto.

JPMorgan analysts stated that while cryptocurrency fundraising improved significantly in Q4/2023, continuity into 2024 is still needed to confirm that capital flows have truly returned to the crypto market, signaling the end of the “crypto winter” phase.

JPMorgan itself has proposed various initiatives to adopt different cryptocurrencies, such as the JPM Coin project used for payment trials. However, the bank's CEO, Jamie Dimon, recently testified before the U.S. Congress that he strongly opposes crypto for enabling criminal activities such as money laundering, tax evasion, and drug trafficking, and if given the decision-making power, he would eliminate cryptocurrencies altogether.