- JPMorgan is more bullish on Ethereum than Bitcoin.
- The stance is guided by the many use cases of Ether that are bound to give it an edge over Bitcoin when interest rates and bond yields increase.
- However, both ETH and BTC are currently overpriced in the market according to the investment bank.
The world’s largest investment bank JPMorgan’s advice to crypto investors is that they should dig into Ethereum rather than Bitcoin. In a recent investor note published by the bank’s analysts, led by market strategist Nikolaos Panigirtzoglou, the bank asserted that Ether (ETH), the native token of the Ethereum network, had more upside potential than Bitcoin in the current market.
The analysis was warranted by the macroeconomic conditions attainable globally. The bank notes that with fears of inflation, central banks around the world are pulling back from supporting their economies in a bid to let inflation cool off. The bank anticipates that their move will result in interest rates and bond yields rising.
Where their recommendation comes into play is that with rising interest rates, Ether is poised to surge as it will not be affected by the market trend as much as Bitcoin. Ether’s many utilities in the Ethereum ecosystem will ensure this, as the token powers the majority of the DeFi and NFT markets.
“With [ether] deriving its value from its applications, ranging from DeFi to gaming to NFTs and stablecoins, it appears less susceptible than bitcoin to higher real yields,” the report states.
Bitcoin, on the other hand, does not have this utility advantage but has been thriving due to low-interest rates and an active bond market. These two factors have also played a key role in Bitcoin’s perception as “digital gold” in the eyes of investors who have been worried about uncontrollable inflation.
Despite the bullish stance on ETH, the bank still sees some challenges for both blockchain networks. The major challenge noted by the bank for Ethereum is the growing number of competitors that are gaining market share in the blockchain infrastructure sector. Several of them, including Solana (SOL), Terra (LUNA), and Avalanche (AVAX) are edging in on Ethereum’s market share of smart contracts-enabled crypto services.
Meanwhile, for Bitcoin, the challenge remains growing environmental concerns. The report warns that ESG (Environmental, Social, and Governmental) concerned investors would ultimately prefer Ethereum over Bitcoin for the long term. This is because while they both currently use the extremely power-consuming proof-of-work protocol to secure their networks, Ethereum has a clear path to becoming more environmentally friendly when it implements its planned migration to proof-of-stake come ETH 2.0. Projections by analysts are that ETH 2.0 may materialize in the first quarter of 2022.
Notwithstanding, JPMorgan thinks that both Ethereum and Bitcoin are currently overpriced in the market.