Ethereum Set to Outperform Other Cryptocurrencies in 2024, Says JPMorgan
According to analysts at JPMorgan, Ethereum is expected to regain its dominance and surpass other cryptocurrencies in 2024. This prediction is based on the highly anticipated EIP-4844 upgrade, known as Protodanksharding, which is set to be rolled out in the first half of next year.
Key Factors Behind Ethereum’s Potential Outperformance
- Ethereum’s upcoming EIP-4844 upgrade, Protodanksharding, is expected to boost network activity and give it an edge over Bitcoin and other cryptocurrencies.
- Factors that are seen as bullish for Bitcoin in 2024, such as spot ETF approvals and the halving event, have already been factored into Bitcoin’s current value.
- Decentralized finance (DeFi) continues to face challenges in gaining mainstream adoption due to regulatory issues, technical hurdles, and lack of cooperation.
- Venture capital funding in the crypto industry showed slight improvement in Q4 2022, but a steady growth in Q1 2024 could indicate the end of the crypto winter.
- JPMorgan’s blockchain unit Onyx is experiencing rapid growth despite CEO Jamie Dimon’s criticism of Bitcoin, highlighting the bank’s continued focus on blockchain technology.
The Significance of the EIP-4844 Upgrade
The EIP-4844 upgrade serves as a stepping stone towards full Danksharding on Ethereum. Danksharding is a more efficient form of sharding that utilizes temporary data blobs attached to blocks. This allows for increased data capacity without permanently storing data on-chain or altering Ethereum’s block size.
These data blobs will enhance the efficiency of Layer 2 networks on Ethereum, such as Arbitrum and Optimism. The increased capacity provided by Protodanksharding will enable Layer 2s to handle more transactions and reduce fees without making changes to Ethereum itself. This boost in Layer 2 network activity is expected to drive Ethereum’s outperformance, according to JPMorgan.
Challenges for Bitcoin and Crypto Adoption
On the other hand, Bitcoin may face challenges that limit its potential gains in 2024. JPMorgan suggests that factors like ETF approvals and the halving event are already priced into Bitcoin’s current price. Additionally, previous halvings have resulted in a deceleration of Bitcoin’s market price growth relative to production costs, which could occur again after the 2024 halving.
Furthermore, the adoption of crypto as an asset class still faces obstacles. Decentralized finance struggles to make significant progress in traditional banking and finance, with major financial applications of blockchain technology primarily operating on private chains. Tokenization remains experimental due to regulatory uncertainties, lack of coordination among technologies, and concerns around central bank digital currencies.
Hot Take: Ethereum Poised for Success in 2024
Analysts at JPMorgan predict that Ethereum will surpass other cryptocurrencies in 2024 due to its upcoming EIP-4844 upgrade, Protodanksharding. This upgrade will enhance the efficiency of Layer 2 networks on Ethereum and drive network activity. Meanwhile, factors that are expected to benefit Bitcoin in 2024, such as ETF approvals and the halving event, are already priced into Bitcoin’s current value. Additionally, decentralized finance continues to face challenges in gaining mainstream adoption while traditional financial applications of blockchain technology operate on private chains. Despite these obstacles, Ethereum’s potential for outperformance remains strong.
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