JPMorgan cites reasons Ethereum has outperformed Bitcoin on returns

In April, the price of Ethereum rose by 41%, while Bitcoin’s price fell by 8%. JPMorgan analysts say the trend could continue, according to Business Insider.

In a note to investors, the bank’s analysts highlighted the difference between the assets. In their view, the first cryptocurrency is seen more as a store of value and competes with gold, while Ethereum serves as the backbone of the crypto economy and functions as a unit of exchange.

“To the extent that owning this share of activity is more valuable, the theory says Ethereum should outperform Bitcoin in the long run,” JPMorgan analysts say.

The bank’s analysts identify three reasons why Ether has lately been outperforming Bitcoin on returns.

More resilient liquidity

Last week, a liquidity shock that arose in the derivatives market rocked the entire crypto market, but Bitcoin fared worse than its main competitor.

“Against this backdrop, the more notable development is the sharp rebound in Ethereum’s market depth, which on some exchanges is greater than before the recent liquidity shock,” the bank said.

Less dependence on derivatives markets

In a market with significantly higher spot turnover, the long-term positioning underlying Ethereum is less dependent on leverage in the form of futures or swaps.

Stronger demand fundamentals

Ethereum has long shown higher transaction throughput on its public blockchain than Bitcoin. According to JPMorgan experts, this is likely linked to increased activity in DeFi and other sectors.

Some estimates put 11% of Ethereum’s issuance into highly liquid coins over the past month, while Bitcoin’s figure stood at 4%.

Earlier Kraken analysts predicted Ethereum could surge to $15,000, while Bitcoin, in their view, would rise by less than twofold.