- Ethereum’s move to protodanksharding in 2024 will boost network capacity and reduce fees, allowing it to gain market share against Bitcoin according to JPMorgan.
- Bitcoin’s potential 2024 catalysts like halving and spot ETF approval are already priced into its current value based on decreasing price-to-production cost ratio.
- Crypto VC funding saw a slight rebound in Q4 which could signal the end of the crypto winter if it continues into Q1 2024.
JPMorgan analysts believe Ethereum will reclaim market share from Bitcoin next year thanks to a major network upgrade. Ether’s gains will be driven by Ethereum’s move to “protodanksharding”, which aims to boost network capacity and reduce fees.
What is Protodanksharding?
Protodanksharding introduces temporary “data blobs” that can hold more data than blocks. This provides additional capacity that improves efficiency for Layer 2 networks built on Ethereum. The upgrade comes without altering Ethereum’s block size.
Protodanksharding is a stepping stone toward full implementation of danksharding down the road. Danksharding will eventually shard the Ethereum blockchain to further scale the network.
Bitcoin Price Factors Already Priced In
While Bitcoin has bullish catalysts next year like a halving event and possible spot ETF approval, JPMorgan says these factors are already priced into Bitcoin’s current value.
JPMorgan notes Bitcoin’s price-to-production cost ratio has already decreased significantly since the last halving in 2020. So the 2024 halving is likely fully reflected in Bitcoin’s price at the moment.
Crypto VC Funding Outlook Improving
After a subdued year for crypto venture capital funding, JPMorgan says Q4 numbers have shown a slight improvement. If this trend continues into Q1 2024, it could signal the end of the “crypto winter.”
DeFi Disappointment
The analysts say the biggest disappointment in crypto has been DeFi’s inability to make inroads into traditional finance. Major blockchain applications in finance are happening on private chains, while progress on tokenization and CBDCs has been slow.
Conclusion
While JPMorgan remains cautious on crypto markets broadly, Ethereum’s coming upgrade has analysts predicting it will outperform Bitcoin and other cryptocurrencies next year. But Bitcoin’s own catalysts appear to already be priced in based on current value-to-production cost ratios.
