Why Ether Will Drastically Outperform Bitcoin In 2024

According to banking giant JPMorgan, the price of ether is poised to outperform Bitcoin in 2024 due to a key technological upgrade that will make the Ethereum blockchain more scalable.

JPMorgan analysts nonetheless remain generally cautious about crypto prices in the coming year amid “excessive optimism” over the approval of a spot Bitcoin exchange-traded fund (ETF).

Ether To Outshine Bitcoin Next Year

JPMorgan expects ether to largely outperform bitcoin and other crypto assets in 2024.

“We believe that next year Ethereum will re-assert itself and recapture market share within the crypto ecosystem,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a Dec. 13 report.

The analysts pointed to the EIP-4844 “Protodanksharding” upgrade as a potential catalyst. Protodanksharding, which is an initial step toward the full implementation of Danksharding, will allow the network to scale and handle up to 100,000 transactions per second.

JPMorgan warned that it is “too early to be getting excited” about a resurgence of decentralized finance (DeFi) and non-fungible token activity while noting the “encouraging” rise of new DeFi chains such as Aptos, SUI, and Pulsechain.

Halving Already Priced In? 

JPMorgan analysts also argued that the upcoming bitcoin halving is already priced in. While previous halvings have triggered bull runs, the bank thinks the April 2024 halving event will not have the same market effect.

The reasoning is that after the halving in 2020, the ratio of bitcoin’s market price to production cost decreased and a similar move after next year’s reduction in mining reward is likely.

“And given the current ratio of the bitcoin price to production cost is around x2.0 at the moment, this would imply that the 2024 bitcoin halving event is largely in the price,” the bank summarized.

Will Spot Bitcoin ETFs Flop? 

Bitcoin has received a fair share of fanfare about ETFs since Wall Street titan BlackRock filed paperwork for a spot product back in June, shortly followed by filings from a handful of other high-profile companies, Fidelity among them.

JPMorgan, however, poured cold water on hopes that the highly-awaited approval of spot-based Bitcoin ETFs will lead to a ton of money flooding into the space.

The analysts cited the lack of success for the already existing spot ETFs in Canada and Europe, and also the possibility that money would flow into spot Bitcoin ETFs from available BTC products like the futures ETFs and Bitcoin mining firms.

They further suggested that roughly $2.7 billion could leave the Grayscale Bitcoin Trust (GBTC) following its transformation into a spot Bitcoin ETF as investors lock in profits. When that money leaves the market instead of flowing into other BTC products, it would put intense downward pressure on the price of the premier crypto, JPMorgan noted.

“Excessive optimism by crypto investors arising from an impending approval of spot bitcoin ETFs by the SEC has shifted bitcoin to the overbought levels seen during 2021,” the analysts continued.