JPMorgan analysts anticipate Ethereum (ETH) will surpass Bitcoin and other cryptocurrencies in performance next year, chiefly due to the EIP-4844 upgrade expected in the first half of 2024.
The upgrade, known as Protodanksharding, marks a significant improvement for the Ethereum network. Unlike traditional sharding methods, Protodanksharding introduces data blobs, temporary data packets attached to blocks, optimizing Layer 2 networks' efficiency without altering Ethereum's block size.
This upgrade benefits Layer 2 networks like Arbitrum and Optimism, enhancing network throughput and reducing transaction fees by providing additional temporary data space.
While bullish factors for Bitcoin, such as potential spot ETF approval and the upcoming halving, are already factored into its price, Ethereum's upgrade is poised to bring significant improvements, according to JPMorgan analysts.
They also highlighted challenges facing decentralized finance (DeFi), emphasizing its inability to integrate effectively into the traditional financial system. This integration is crucial for crypto to expand from its native environment to real-world applications.
Additionally, JPMorgan analysts noted that crypto VC funding, which improved in Q4 2023 compared to previous quarters, signals a potential end to the "crypto winter" if the trend continues into Q1 2024.