Global banking giant JPMorgan has revealed its expectation for better performance of altcoins, especially Bitcoin (BTC), in 2024, despite its strong belief in cautious optimism for the cryptocurrency market.
JPMorgan’s Optimistic Table for Altcoin King Ethereum
Nikolaos Panigirtzoglou and his team of JPMorgan analysts stated in their latest report, “We expect Ethereum to reassert itself in the crypto world next year and significantly increase its market share.” The analysts emphasized that the major catalyst for the expected surge in the altcoin king would be the EIP-4844 update or Protodanksharding, expected to take place in the first half of 2024. The analysts noted, “We believe this update will be a significant step towards improving Ethereum’s network activity and will help Ethereum perform better.”
As known, Protodanksharding represents the first step towards the full implementation of Danksharding, a more efficient sharding form for Ethereum. Unlike the initially planned sharding technique, Danksharding keeps Ethereum away from a complex process of breaking it into multiple fragmented chains. Instead, it will provide data blobs that are attached to blocks, capable of holding more data than blocks, but are not permanently stored or accessible by the Ethereum virtual machine.
JPMorgan analysts evaluate that the update will be particularly beneficial for Layer 2 networks in Ethereum, as it will increase network efficiency and reduce transaction fees for Layer 2 networks such as Arbitrum (ARB) and Optimism (OP). At the heart of this idea lies the increase in efficiency of Layer 2 networks without changing the Ethereum block size using data blobs.
JPMorgan: Spot Bitcoin ETF Approval and Block Reward Halving Priced In
JPMorgan analysts also consider that factors seen as bullish for Bitcoin next year, such as the potential approval of a spot Bitcoin ETF and the upcoming block reward halving, have already been priced in. The analysts point out that, similar to the block reward halving in 2020, the ratio of Bitcoin’s market price to its production cost has decreased, and they expect a similar situation after the block reward halving in 2024.
The analysts said, “Considering that the current ratio of Bitcoin’s price to its production cost is around x2.0, it means that the 2024 block reward halving has largely been priced in.”
According to JPMorgan analysts, decentralized finance (DeFi) continues to disappoint due to its inability to penetrate traditional finance. They note, “The biggest applications of Blockchain for traditional finance, such as overnight repo transactions via smart contracts on Blockchain platforms hosted by companies like Broadridge and JPMorgan, are happening outside public Blockchains. Tokenization is progressing very slowly, and the lack of cooperation and compatibility between platforms, delays in the issuance of central bank digital currencies by central banks such as Fed and ECB, and regulatory shortcomings mean it remains largely experimental.”
