JPMorgan Seeing “Strong Preference for Ethereum Over Bitcoin”

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  • JPMorgan is seeing greater institutional interest in Ethereum over Bitcoin
  • Bitcoin experienced “backwardation” in September while Ethereum didn’t
  • JPMorgan claimed that Ethereum could become the “Amazon of information”

JPMorgan has claimed that institutional buyers are favoring Ethereum over Bitcoin as a longer term hold, echoing sentiments made by Goldman Sachs earlier this year. A report by Zerohedge references comments made by JPMorgan analysts and adds them to opinion given by Goldman Sachs about Bitcoin and Ethereum back in May, painting a picture of Ethereum making serious inroads into Bitcoin’s status as the number one cryptocurrency.

Bitcoin Futures Down While Ethereum Futures Up

Zerohedge reports that while JPMorgan has maintained its positive outlook on Bitcoin as an asset, it says that institutional investors are showing “a strong preference for Ethereum versus Bitcoin”. While the sentiment echoes that of Goldman Sachs, JPMorgan’s rationale is purely based on technical factors whereas Goldman’s was more of a fundamentals play.

JPMorgan looked at relative futures spread to spot for the top two cryptocurrencies, as well as the relative institutional open interest in Bitcoin versus Ethereum. They noticed that the September crash had led to ‘backwardation’, which is when the current price of an underlying asset is higher than prices trading in the futures market. This backwardation represents “a setback” for Bitcoin according to analyst Nick Panigirtzoglou and is a “reflection of weak demand by institutional investors”.

Ethereum on the other hand is in the opposite situation, seeing a rise in futures interest. With futures being the main way for institutional investors to gain access to the markets right now this illustrates that big players are more interested in Ethereum than Bitcoin.

JPMorgan Stats Backs Goldman Sachs Sentiment

The rationale for this is very likely to do with the fundamental reasons listed by Goldman Sachs analysts back in May. They noted Ethereum’s move to a deflationary proof-of-stake model compared to Bitcoin’s power-hungry proof-of-work as being a catalyst for institutional interest, alongside its much wider application base, saying that it had the potential to become the “Amazon of information”.

The Goldman report added that Ethereum’s potential use cases, which it said ranged from decentralized finance to the safe storage of personal information, meant that ETH had the potential to beat Bitcoin as a store of value:

The greater number of transactions in ether versus bitcoin reflects this dominance. As cryptocurrency use in DeFi and NFTs becomes more widespread, ether will build its own first-mover advantage in applied crypto technology.

Talk of ‘the flippening’, where Ethereum overtakes Bitcoin as the number one cryptocurrency by market cap, used to be fanciful years ago, but with its new deflationary model, Ethereum 2.0 upgrade, and greater institutional interest, suddenly this is no longer the stuff of fantasy.