JPMorgan’s cautious 2024 crypto outlook sees Ethereum potential
Wall Street giant JPMorgan is taking a cautious stance on cryptocurrency markets’ bull run into 2024 in its latest outlook.
The report predicts a muted performance for Bitcoin (BTC) while suggesting Ethereum (ETH) might steal the spotlight. The bank also believes the potential approval of spot BTC exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) won’t trigger significant gains.
JP Morgan’s analysts, led by Nikolaos Panigirtzoglou, believe the upcoming BTC halving is already baked into the price. They argue that the event’s predictable impact on the supply has been well-factored, reflected in the current $42,000 price tag.
While BTC’s price is double its post-halving production cost (estimated at $22,000), the bank anticipates a 20 percent drop in hash rate, causing higher-cost miners to exit the market. They believe it will counterbalance any potential price surge from the halving.
In contrast, the analysts believe ETH might shine brighter in 2024. “We believe that next year Ethereum will reassert itself and recapture market share within the crypto ecosystem,” the analysts wrote.
They wrote that ETH’s potential to shine stems from the EIP-4844 upgrade, known as “Proto-danksharding.” Building upon sharding technology, the development aims to improve transaction speed and efficiency through a new “blob-carrying transaction” type. However, the report also raises concerns about the centralization of staking on the Ethereum network.
Crypto’s challenges, cautions
JPMorgan also questions the belief that TradFi giants like BlackRock and Fidelity will bring billions to BTC through spot ETFs. Pointing to their lukewarm reception in Europe and Canada, the report argues these ETFs might reshuffle existing BTC investments from the Grayscale Bitcoin Trust (GBTC), futures ETFs or mining companies. Worse, they fear $2.7 billion in GBTC investor profits could be withdrawn upon conversion, harming prices.
While acknowledging a recent “reinvigoration” in venture capital funding for crypto, the bank remains cautious, calling it preliminary. However, it views a sustained resurgence in venture capital activity as a potential turning point, marking the “end of the Crypto Winter” if it continues into 2024.
The report also acknowledges some improvements in decentralized finance (DeFi) activity. However, it highlights the lack of DeFi’s integration with traditional finance as a significant obstacle to the crypto ecosystem’s wider adoption beyond niche applications.
The cautious outlook comes only a week after JPMorgan CEO Jamie Dimon’s scathing remarks about crypto at a Senate Banking Committee hearing. Dimon expressed strong opposition, calling it a haven for criminal activity and tax avoidance.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information