JP Morgan analysts have deduced that the hype behind Bitcoin ETFs will not pay off as expected, and instead, Ether could exceed expectations by overshadowing Bitcoin in 2024.
Could ETH Overtake BTC?
JP Morgan, a financial juggernaut in the traditional banking sector, is steering away from the prevalent optimism surrounding Bitcoin's prospects in 2024. The company’s CEO, Jamie Dimon, has previously made controversially critical comments about BTC and its role in illicit activities, which have generated significant pushback.
Now, the institution is predicting a shift in the crypto landscape, favoring Ethereum over Bitcoin, as it contends that the much-anticipated halving event may not provide the boost enthusiasts are hoping for.
JP Morgan: “Spot ETF Optimism Misplaced”
Contrary to widespread expectations that spot Bitcoin ETFs could be a game-changer, JP Morgan suggests a cautious approach. The financial giant points to weak demand for existing spot Bitcoin ETFs in Europe and Canada, casting doubts on the prospects of a similar instrument gaining substantial traction in the U.S. According to their analytics team, rather than attracting new capital, spot ETFs might redirect funds from existing Bitcoin-backed investments.
The potential conversion of the Grayscale Bitcoin Trust, the world's largest Bitcoin fund, into a spot ETF is also seen as a risky move. If allowed, existing investors could withdraw up to $2.7 billion, causing a significant impact on the ETF's stability and potentially denting Bitcoin prices.
Halving Event and Bitcoin Mining Concerns
JP Morgan's skepticism extends to the forthcoming Bitcoin halving event. Despite expectations that the reduction in the number of circulating Bitcoin tokens would drive up prices, the institution argues that this event is already factored into the current value of Bitcoin. Based on current hash rates and mining difficulties, they predict a doubling of production costs, anticipating a 20% decline in the hash rate that could force miners with high operational costs to exit the market.
Ethereum's Potential
In contrast to their reserved stance on Bitcoin, JP Morgan is more confident about Ethereum's prospects in 2024. The report highlights Ethereum's upcoming EIP-4844 "Proto-dank sharding" upgrade, acknowledging its potential to impact the asset positively. However, the institution does express concerns over centralized staking on the Ethereum network, hinting that even Ethereum is not without its potential challenges.
As 2024 approaches, JP Morgan is urging caution in the crypto market. Their bearish outlook on Bitcoin, fueled by concerns over the halving event and spot ETF optimism, is juxtaposed against a more optimistic view of Ethereum's potential.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
