In a notable crypto outlook for the upcoming year, JPMorgan analysts foresee Ethereum taking the lead over Bitcoin and reclaiming its market share. The catalyst for this potential shift is identified as the anticipated network upgrade known as EIP-4844, colloquially referred to as Protodanksharding.
The analysts express caution about the overall crypto markets in 2024 but express optimism about Ethereum’s prospects. They believe that Ethereum’s performance will surpass that of Bitcoin and other cryptocurrencies, propelled by the forthcoming Protodanksharding upgrade.
Essentially, Protodanksharding is a proposal aimed at reducing transaction costs and increasing the number of transactions processed per second. If implemented successfully, these changes could act as a driving force for Ethereum to regain its share of the crypto market by enhancing network activity.
The analysts state, “We believe that next year Ethereum will re-assert itself and recapture market share within the crypto ecosystem.”
In the current year, Ethereum has experienced a resurgence, marking an almost 90% increase in value since January, reaching $2,270. While these gains are noteworthy, they lag behind Bitcoin’s meteoric rise of approximately 154%.
The prevailing optimism in the crypto space regarding the potential approval of a spot Bitcoin ETF has contributed significantly to the ongoing rally. However, JPMorgan analysts adopt a more skeptical stance regarding the bullish sentiments surrounding Bitcoin.
While crypto enthusiasts anticipate that a spot ETF approval would enhance liquidity and lower entry barriers for new investors in Bitcoin, JPMorgan analysts question the influx of new capital. They argue that the scenario might involve a reshuffling of funds within the crypto space rather than an influx of entirely new capital.
Another factor adding fuel to the Bitcoin hype is the upcoming halving event scheduled for April 2024. Traditionally, halving events lead to a reduction in the supply of the currency, influencing upward price movements. However, JPMorgan analysts offer a more bearish perspective, suggesting that the impact of the quadrennial event is already factored into the current price.
The analysts anticipate a potential 20% drop in the hash rate post-halving, with miners in higher-cost locations or with less efficient hardware potentially exiting the market. In this scenario, they predict a Bitcoin price of around $35,000 post-halving.
As the crypto landscape evolves, JPMorgan’s insights provide a nuanced perspective on the potential dynamics between Ethereum and Bitcoin in the coming year. Investors and enthusiasts will be closely watching for developments around the Protodanksharding upgrade and how it may shape the competitive landscape within the crypto ecosystem.
