- JPMorgan believes that Ethereum has the potential to outperform Bitcoin in 2024
- The analyst cited the imminent EIP-4844 upgrade (Protodanksharding) as its rationale
- The bank also said that Bitcoin’s halving and Bitcoin ETF approval are priced in
JPMorgan believes that Ethereum may outperform Bitcoin in 2024, despite the fundamental narratives lining up for the world’s biggest cryptocurrency. The bank’s analysts said this week that they believe Ethereum will “re-assert itself and recapture market share within the crypto ecosystem,” crediting this rise to the EIP-4844 upgrade (also known as Protodanksharding), which is expected to take place during the first half of the year 2024. This is despite Bitcoin having narratives such as the 2024 halving and the probable launch of a Bitcoin ETF.
Danksharding is Ethereum’s Shining Light
JPMorgan’s team stated in an investor note that the EIP-4844 upgrade “will likely prove a bigger step towards improving Ethereum network activity” which will help it outperform Bitcoin. Protodanksharding is an initial step toward the full implementation of Danksharding, a more efficient form of sharding for Ethereum.
Unlike the originally planned sharding technique, Danksharding avoids the complex process of splitting Ethereum into multiple shard chains. Instead, it introduces data blobs, temporary data packets attached to blocks, capable of holding more data than blocks but not permanently stored or accessed by the Ethereum virtual machine.
The upgrade is particularly beneficial for Layer 2 networks like Arbitrum and Optimism, JPMorgan’s analysts reiterated, as it provides an additional temporary data space to increase network throughput and reduce transaction fees for Layer 2 networks on Ethereum. In essence, data blobs enhance the efficiency of Layer 2 networks without altering the Ethereum block size.
Bitcoin Narratives Priced In?
JPMorgan also believes that Bitcoin’s bullish factors aren’t all that, claiming that the possible approval of spot ETFs and upcoming halving, are already priced in:
…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.
After the 2020 halving, the analysts noted, the ratio of Bitcoin’s market price to production cost decreased and said a similar move after the 2024 halving would be reasonable.
