JPMorgan indirectly advises buying Ethereum if it is to be cryptocurrencies, reports Business Insider . Bitcoin could soon face a problem, say analysts at the banking giant. The reason for this cautious pessimism about Bitcoin can be found in the plans of the US Federal Reserve.
Downward pressure on Bitcoin makes Ethereum more attractive
The central bank announced that it would raise interest rates. The Bank of England also announced on Thursday that interest rates must rise in the coming months. As a result, the Federal Reserve reportedly plans to begin cutting its monthly bond purchases by $ 120 billion.
For market strategist Nikolaos Panigirtzoglou from JPMorgan, this will mean that the resulting downward pressure on Bitcoin and typical inflation hedges – such as gold – will make Ethereum a more attractive investment. This is because the value of Ethereum is primarily derived from the high number of decentralized applications and other use cases – such as NFT. Panigirtzoglou says:
“The rise in bond yields and the possible normalization of monetary policy are putting Bitcoin as a form of digital gold under downward pressure, just as higher real yields have put pressure on traditional gold. Since Ethereum derives its value from its applications, which range from DeFi to gaming to NFTs and stablecoins, it appears to be less prone to higher real returns than Bitcoin. ”
Ecological aspects are gaining in importance
In addition, JPMorgan sees a shift in investor interest away “from the energy-intensive Bitcoin blockchain to the Ethereum blockchain”. A changed focus can be observed here, which gives greater weight to ecological and social factors. Ultimately, the ecological factor could even become tangibly pecuniary if authorities such as the Swedish financial supervisory authority can enforce their proposal for an EU ban on proof-of-work mining.
Earlier this week, JPMorgan questioned the often-voiced Bitcoin price target of $ 100,000 for the fourth quarter. For the experts, the current volatility was too high for such a forecast. In general, the price of Bitcoin rose mainly due to investors’ concerns about rising inflation in the USA.
The ecological advantages that JPMorgan attributes to Ethereum do not yet exist. The second largest blockchain network in the world continues to use the energy-intensive proof-of-work consensus model that Bitcoin also uses.
At Ethereum, however, is already making the switch to the much more ecological proof-of-stake process. It could be so far in the first half of 2022. With Bitcoin, such a date is still in the stars.