JPMorgan analysts forecast Ethereum to surpass Bitcoin in 2024

JPMorgan analysts say that in 2024 Ethereum is likely to outpace Bitcoin and other cryptocurrencies thanks to upcoming blockchain scalability upgrades. CoinDesk reports this, citing the firm’s report.

“Ethereum will once again make its mark and reclaim market share. The primary catalyst will be the implementation of EIP-4844 or proto-danksharding,” experts explained.

The solution envisages a more efficient form of sharding without dividing the network into small fragments. The update will introduce a transaction format with BLOB — temporary data packets attached to blocks.

They hold more information than blocks, but are not stored permanently and are not compatible with EVM.

JPMorgan noted that the upgrade will be especially useful for layer-2 networks like Arbitrum and Optimism, as it provides additional space for data storage, boosting protocol performance and reducing fees.

Analysts noted that the expected in 2024 “bullish” factors for the flagship cryptocurrency, including the possible approval of a spot ETF based on the asset and halving, are already priced in.

In their view, there is a high likelihood of a “buy the rumor, sell the news” effect when the investment product launches.

“Excess optimism among crypto investors, driven by the forthcoming approval of the SEC spot Bitcoin ETF, has pushed the coin to overbought levels seen in 2021,” JPMorgan explained.

DeFi and VC

“The biggest disappointment in the DeFi sector remains its inability to break into traditional finance,” the bank’s experts say.

“The most common application of the technology in TradFi is presented in the form of overnight repo trades using smart contracts on blockchain platforms. They are issued by firms like Broadridge and JPMorgan, and the transactions themselves occur off public blockchains,” the analysts clarified.

Moreover, the tokenization of real-world assets is developing “quite slowly” and remains at the experimental stage.

Barriers to growth cited by JPMorgan include fragmentation, lack of collaboration and consolidation across platforms, delays in central bank digital currency deployments by the Fed and the ECB, and also the absence of regulatory rules for the industry.

In Q4 2023, researchers recorded “uptick” in venture funding in the crypto market, but in their view, it is too early to talk about further prospects.

“Nevertheless, if such momentum continues into the first quarter of 2024, it will be a significant event that would mark the end of the crypto winter,” the analysts said.

Earlier in Bitwise predicted a new Bitcoin high at $80 000 thanks to the approval of a spot ETF based on it and the halving.

In late November, Matrixport predicted that the first cryptocurrency would rise to $63 140 by April 2024 and to $125 000 — by the end of the next calendar year.

Later Glassnode indicated precursors to volatile Bitcoin swings within a 50% range around the $36 000 level.