JP Morgan, an international leader in financial services, recently released financial projections for 2024 which take a cautious position on the cryptocurrency market. Despite the approach, the bank expects a halving event for Bitcoin and Ethereum (ETH) outperforming the market in the next year. This is characterized by increased speculation and anticipation.
JP Morgan’s analysis suggests Ethereum could grow more than Bitcoin in 2024 due to its upcoming EIP 4844 update – also known as “Proto-dank sharding” – which is expected to enhance Ethereum’s network efficiency and scalability, giving it an edge in the market.
In contrast, Bitcoin’s much-anticipated halving event is already reflected in its current value. Halving the rewards for mining new Bitcoins is anticipated to increase production costs, and could lead to a 20 percent decline in hash rate, resulting in higher operating costs and the expulsion of less efficient miners from the market.
JP Morgan’s report is centered on the notion of “excessive optimism” surrounding Bitcoin. According to the bank’s analysts, this optimism has led to the asset being overbought in a market that has preemptively priced in the effects of the upcoming halving event. The expectations for capital flows into spot Bitcoin ETF products are also often overstated, according to the bank.
Regarding mining, the halving is expected to double production costs on current hash rate difficulties. Cost increases combined with the predicted decline in hash rates may force miners to leave the industry, further impacting the Bitcoin ecosystem.
JP Morgan’s outlook favours Ethereum over Bitcoin for the upcoming financial year. However, one of the most notable features of Ethereum’s network – the centralised stake mechanism – has raised questions about network security and decentralization, critical factors for the broader acceptance and success of any cryptocurrency.
