The analysts drawn from the American investment bank JPMorgan project Ether to outperform Bitcoin in the bullish 2024 for cryptocurrencies. The prediction by the JPMorgan analysts would coincide with Ethereum’s EIP-4844 upgrade scheduled for 2024.
JPMorgan analysts drifted from the bank’s cautious approach towards crypto markets in 2024 to predict that Ether would outdo other cryptocurrencies. The analysts firmly believe that Ethereum would re-assert itself and regain the market share it has ceded recently to Bitcoin and other altcoins.
EIP-4844 Upgrade to Drive Ether Activity
The Wednesday, December 13 note by the JPMorgan analysts considered the EIP-4844 upgrade the primary catalyst that would propel Ethereum to recapture market share. The team led by Nikolaos Panigirtzoglou considered the upgrade dubbed Protodanksharding is scheduled for completion by mid-2024.
The note portrays the EIP-4844 upgrade as a critical leap towards enhancing Ethereum network activity, thus powering its native token to outperform the cryptocurrencies.
Protodanksharding is the initial step towards the realization of Danksharding, initially projected as a more efficient Ethereum sharding. Contrary to the initial sharding technique, Danksharding is profiled as averting the complex process of splitting Ethereum into constituent shard chains.
Danksharding features unveil data blobs as temporary data packets linked to the blocks. Such are capable of holding huge data, unlike blocks. The technique would enhance the network given that the data blobs are neither permanently stored nor can the Ethereum virtual machine access them.
The EIP-4844 upgrade will yield benefits that Layer 2 networks, including Optimism and Arbitrum, can leverage for increased network throughput. The JPMorgan analysts stated that the upgrade would deliver additional temporary data space, ultimately improving the network throughput. The analysts suggested that besides extra space, it would lower the transaction fees for the L2 networks on Ethereum.
Consequently, Panigirtzoglou observes that data blobs would ultimately enhance L2 networks’ efficiency without interference with the Ethereum block size.
Ether to Triumph Over Bullish Bitcoin Amid Spot ETFs Approval
JPMorgan analysts consider that Ether would outperform Bitcoin even when factoring in the looming Bitcoin halving in mid-2024. Similarly, the analysts indicate that bullish Bitcoin would not match Ether’s resurgence in 2023 even when you price in much-anticipated spot ETF approval.
The analysts reflected on the 2020 halving when the market price relative to Bitcoin’s
production cost dipped. A similar outcome is inevitable following the 2024 halving.
The analysts highlighted that the current ratio of price-to-production cost averages x2.0. The metric suggests that the price movement following the 2024 Bitcoin halving event is primarily factored into the projected price.
DeFi Struggles Against Traditional Financial System
JPMorgan analysts decried that decentralized finance would sustain the biggest disappointment for its inability to encroach on traditional finance (TradFi).
The Wednesday note captured the analysts’ perspective that DeFi’s struggles deny the crypto ecosystem a facilitative transition from crypto native to real-world applications (RWA).
The JPMorgan note illustrated that blockchain’s biggest usage to the TradFi involves overnight repo transactions executed through smart contracts. While such are within the blockchain platforms, they are often hosted by entities such as JPMorgan and Broadridge, frequently occurring beyond the public blockchains.
The analysts lamented that tokenization is evolving gradually, though. The process leaves it primarily at the experimental phase, where it battles various challenges such as fragmentation, missing cooperation and inadequate platform interoperability.
The analysts observed that tokenization has yet to leap beyond the experimental phase, given the delays by FED and ECB in unveiling central bank digital currencies (CBDC) as supportive product-specific regulations.
Optimism in Crypto VC Funding
The resurgence witnessed across the crypto space attracts increased activity from venture capitalists. Such a trend is evident in the improved venture capital funding in the fourth quarter of 2023.
Unlike the subdued activity witnessed last year, venture capital funding portrays tentative improvement.
The analysts project that sustaining the improvement in venture capital funding in 2024 is a significant milestone for the crypto investments ecosystem. Its achievement in the upcoming quarter would propel the cryptocurrency ecosystem beyond the dark days of prolonged winter.
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