JPMorgan anticipates that Ethereum (ETH) will outperform Bitcoin (BTC) and other cryptocurrencies in 2024, citing the expected upgrade known as EIP-4844 or Protodanksharding as a key catalyst. The bank remains generally “cautious” about the overall crypto markets in the coming year. In a note, JPMorgan analysts led by Nikolaos Panigirtzoglou highlighted their belief that Ethereum will re-establish itself and regain market share within the crypto ecosystem in 2024.
The anticipated Protodanksharding upgrade, scheduled for the first half of 2024, is considered a significant step in improving Ethereum network activity. JPMorgan believes this upgrade will likely contribute to Ethereum’s outperformance. Protodanksharding is an initial phase toward the full implementation of Danksharding, a more efficient form of sharding for Ethereum. Unlike the original sharding technique, Danksharding introduces data blobs—temporary data packets attached to blocks that can hold more data than blocks. These blobs are not permanently stored or accessed by the Ethereum virtual machine.
The upgrade is particularly beneficial for Layer 2 networks like Arbitrum and Optimism, as it increases network throughput and reduces transaction fees for these Layer 2 networks on Ethereum. Data blobs enhance the efficiency of Layer 2 networks without altering the Ethereum block size.
JPMorgan analysts also noted that factors considered bullish for Bitcoin in 2024, such as the potential approval of spot ETFs and the upcoming halving, are already priced in. They referred to the ratio of Bitcoin’s market price to production cost and suggested that the 2024 Bitcoin halving event is largely reflected in the current Bitcoin price.
While expressing caution about the overall crypto markets, JPMorgan’s positive outlook on Ethereum is based on the potential impact of the Protodanksharding upgrade, which is expected to enhance Ethereum’s network capabilities and improve its performance relative to other cryptocurrencies.
