JPMorgan, the global banking giant, expects a brighter future for altcoins, especially Bitcoin (BTC), in 2024 while maintaining a cautiously optimistic stance on the overall cryptocurrency market.
The bank’s analysts, led by Nikolaos Panigirtzoglou, anticipate Ethereum to regain prominence in the crypto sphere next year, foreseeing a significant surge in its market share. Their bullish prediction stems from the anticipated EIP-4844 update, nicknamed Protodanksharding, scheduled for the first half of 2024. JPMorgan believes this update will notably enhance Ethereum’s network activity and overall performance.
Protodanksharding marks a pivotal step toward implementing Danksharding, a more efficient sharding technique for Ethereum. Unlike the initial sharding plan, Danksharding streamlines Ethereum without fragmenting it into multiple chains. Instead, it introduces data blobs attached to blocks, capable of storing substantial data, albeit not permanently accessible to the Ethereum virtual machine.
The update is expected to benefit Ethereum’s Layer 2 networks like Arbitrum (ARB) and Optimism (OP), improving efficiency and reducing transaction fees without altering Ethereum’s block size.
However, JPMorgan analysts suggest that potential bullish factors for Bitcoin in the coming year, including the potential approval of a spot Bitcoin ETF and the upcoming block reward halving, have already been factored into the market. They draw comparisons to the decreased ratio of Bitcoin’s market price to production cost post the 2020 block reward halving and anticipate a similar scenario after the 2024 halving.
Despite these positive projections for cryptocurrencies, JPMorgan remains critical of decentralized finance (DeFi). They highlight the slow integration of blockchain applications into traditional finance, pointing out that significant financial transactions using smart contracts are occurring outside public blockchains. Tokenization, central bank digital currency issuance, regulatory issues, and platform compatibility challenges continue to hinder mainstream adoption and keep DeFi largely experimental.
