JPMorgan analysts have expressed their expectation that Ethereum (ETH) will outperform Bitcoin (BTC) and other cryptocurrencies in 2024, despite maintaining a generally cautious stance on the crypto market for the upcoming year.
In a note published on Wednesday, analysts led by Nikolaos Panigirtzoglou stated, “We believe that next year Ethereum will re-assert itself and recapture market share within the crypto ecosystem.” They highlighted the EIP-4844 upgrade, also known as Protodanksharding, as the main catalyst for Ethereum’s anticipated performance. This upgrade is set to take place during the first half of 2024 and is expected to significantly enhance Ethereum’s network activity.
Protodanksharding represents an initial step towards the implementation of Danksharding, a more efficient form of sharding for Ethereum. Unlike the original sharding technique, Danksharding simplifies the process by introducing data blobs, temporary data packets attached to blocks. These data blobs have greater data capacity than blocks, but they are not permanently stored or accessed by the Ethereum virtual machine.
The JPMorgan analysts emphasized that the upgrade would particularly benefit Layer 2 networks like Arbitrum (ARB) and Optimism (OP). It would provide additional temporary data space, improving network throughput and reducing transaction fees for Layer 2 networks on Ethereum. Essentially, data blobs enhance the efficiency of Layer 2 networks without altering the Ethereum block size.
JPMorgan analysts also indicated that factors expected to be bullish for Bitcoin in 2024, such as the possible approval of spot ETFs and the upcoming halving, are already factored into its price. They noted that the ratio of Bitcoin’s market price to production cost decreased after the 2020 halving and stated that a similar response could be expected after the 2024 halving.
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