JPMorgan Is Cautious About Crypto Markets Into 2024

Wall Street giant JPMorgan (JPM) said it is cautious about cryptocurrency markets into 2024, but expects ether (ETH) to outperform bitcoin (BTC) and other cryptocurrencies due to an upgrade that will make the Ethereum blockchain more scalable.

The U.S. Securities and Exchange Commission's (SEC) decision on whether to approve spot bitcoin exchange-traded-funds (ETFs) is unlikely to spur major gains, it said in a report on Wednesday.

There is a “high chance of buy-the-rumor/sell-the-fact effect once the SEC approves spot bitcoin ETFs early next year,” analysts led by Nikolaos Panigirtzoglou wrote.

“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,” JPMorgan said, adding that the 2024 bitcoin halving event is “largely priced in.”

Ether is likely to shine due to the EIP-4844 upgrade, or proto-danksharding. That's a development of sharding – splitting the network into shards to improve transaction speed – by way of Danksharding, which uses the shards to increase space for groups of data. Proto-danksharding involves adding a new transaction type to Ethereum: the “blob-carrying transaction.”

The bank notes that there has been some “reinvigoration” in venture capital (VC) funding in the fourth quarter of 2023, but it appears “rather tentative.”

While there has been some improvement in decentralized finance (DeFi) activity, the “biggest disappointment continues to be the inability of DeFi to encroach into the traditional financial system, which is necessary for the crypto ecosystem to transition from crypto native to real world applications,” the report added.

The Crypto Market Rally Looks Overdone, JPMorgan Says

Edited by Sheldon Reback.