As the crypto landscape evolves, JPMorgan analysts have thrown a curveball, suggesting that Ethereum (ETH) could overshadow Bitcoin (BTC) in 2024. Despite the buzz around Bitcoin’s recent price rallies, the banking giant contends that the leading cryptocurrency might be overhyped and faces challenges, particularly with the anticipated ETF optimism.
Bitcoin’s ETF Enthusiasm: A Closer Look
Contrary to the optimistic sentiment surrounding Bitcoin’s potential bull run, JPMorgan’s recent report raises concerns about the coin’s overbought status. The excitement primarily stems from expectations that the Securities and Exchange Commission (SEC) will greenlight several spot Bitcoin ETFs in January 2024.
However, JPMorgan argues that this optimism is misplaced, pointing to the lackluster demand for existing spot Bitcoin ETFs in Europe and Canada. The bank suggests that the anticipated spot ETFs may struggle to attract substantial capital in the U.S. market. Instead, these ETFs might draw from existing investments in Bitcoin-backed vehicles like the Grayscale Bitcoin Trust (GBTC), Bitcoin futures ETFs, or Bitcoin mining companies.
Furthermore, JPMorgan warns of a potential downside if the Grayscale Bitcoin Trust, the world’s largest Bitcoin fund, transitions into a spot ETF. Existing investors could seize the opportunity to realize profits, pulling an estimated $2.7 billion from the ETF. This mass withdrawal could significantly impact prices, according to the report.
Bitcoin Halving and Its Impact
Addressing another common expectation in the crypto community, JPMorgan challenges the belief that the upcoming Bitcoin halving, which reduces the mining reward, will act as a catalyst for the coin’s growth. The report suggests that the halving has already been factored into current prices and may not provide the anticipated boost.
Ethereum’s Ascendancy in 2024
In contrast to Bitcoin’s uncertainties, JPMorgan sees potential for Ethereum to outshine its counterpart in 2024. The report points to an upcoming upgrade to the Ethereum blockchain known as EIP-4844 or proto-danksharding. This upgrade aims to enhance throughput and reduce transaction fees, making Ethereum more attractive for users.
JPMorgan analysts express their belief that Ethereum will reclaim market share within the crypto ecosystem in the coming year. The anticipated improvements to the Ethereum network could position it as a formidable player in the market.
VC Funding and Crypto Industry Resurgence
The report also touches on the state of venture capital (VC) funding in the crypto industry. While acknowledging a recent uptick in VC funding during the current quarter, JPMorgan remains cautious, deeming it preliminary. A sustained improvement in VC activity, particularly in the first quarter of 2024, could signal the end of the so-called “Crypto Winter” and mark a significant turning point for the industry.
As the crypto landscape undergoes dynamic shifts, JPMorgan’s analysis provides a nuanced perspective, challenging some of the prevailing sentiments and offering a glimpse into what might shape the crypto narrative in 2024. Ethereum’s potential ascendancy and Bitcoin’s ETF enthusiasm set the stage for an intriguing year ahead in the ever-evolving world of digital assets.
