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JPMorgan analysts, led by Nikolaos Panigirtzoglou, emphasize their belief that Ethereum will reclaim market share within the crypto ecosystem in 2024. The EIP-4844 upgrade, expected in the first half of the year, is identified as a significant advancement for the Ethereum network, positioning it for improved activity and market performance.
Protodanksharding, an initial step towards the full implementation of Danksharding, introduces a more efficient form of sharding for Ethereum. This approach utilizes data blobs, temporary data packets attached to blocks, to enhance network throughput without the complexity of traditional shard chains. The upgrade is particularly advantageous for Layer 2 networks like Arbitrum and Optimism, offering additional temporary data space to reduce transaction fees without altering Ethereum's block size.
Contrary to the positive outlook for Ethereum, JPMorgan analysts express a sense of caution regarding Bitcoin's performance in 2024. They assert that factors traditionally seen as bullish for Bitcoin, including the potential approval of spot ETFs and the upcoming halving, are already factored into the market. Drawing parallels with the 2020 halving, the analysts suggest that a similar decrease in the ratio of Bitcoin's market price to production cost is expected after the 2024 halving.
In their evaluation of decentralized finance (DeFi), JPMorgan analysts identify its "biggest disappointment" as the sector's struggle to integrate into the traditional financial system. They highlight the necessity for DeFi to extend its influence into traditional finance for the broader crypto ecosystem to transition from being crypto-native to real-world applications. The analysts note that significant applications of blockchain in traditional finance occur outside public blockchains, and the evolution of tokenization remains hindered by challenges such as fragmentation, lack of cooperation, interoperability issues, delays in central bank digital currency introductions, and regulatory gaps.
On the venture capital (VC) funding front, JPMorgan notes a tentative improvement in the fourth quarter of this year compared to a subdued earlier period. While cautiously optimistic, the analysts suggest that sustained improvement into the first quarter of 2024 could signify the end of the crypto winter.
This insightful analysis from JPMorgan provides a comprehensive overview of the anticipated trends in the crypto market, offering valuable perspectives for investors and enthusiasts alike.
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