It is the turnaround that will certainly have made the crypto community smile the most, the JPMorgan bank is now actively promoting cryptocurrencies.
While it has already recommended that investors allocate 1% of their portfolios to Bitcoin, the famous American bank has published a letter to its customers which explains why the cryptocurrency Ethereum (ETH) is outperforming the leader Bitcoin BTC.
An Ethereum price that has actually held up well to the recent fall in the BTC price below $ 47,000.
In an April 27 investor note, analysts at JPMorgan discuss the reasons why Ethereum has outperformed Bitcoin in terms of earnings this year and why this trend is expected to continue into the future.
The first reason is the major difference between Bitcoin which is rather an asset that acts as a store of value, and Ethereum which is a blockchain heavily used for the development of the economy of the crypto sector, notably with decentralized finance DeFi.
Ether is less dependent on crypto derivatives trading
Due to this strong demand from which the Ethereum ecosystem and therefore its ETH token benefits, its price is less subject to the effects of liquidations, particularly in the trading of futures and other crypto derivatives.
“A higher turnover on the public ETH blockchain means that a significantly higher fraction of these tokens can be considered very liquid, further mitigating the effects of term liquidations.
This suggests that ETH variations may be less dependent on leveraged demand than BTC, a technical but sometimes important tailwind for the future. ”
A more sustainable underlying demand and diversification of institutional investors
Under the effects of the demand for decentralized applications dApps, whether it is DeFi decentralized finance or the rest of the blockchain industry, Ethereum is showing a strong sustained underlying demand.
“The ethereum network has long been characterized by a higher rate of transactions on the blockchain public than bitcoin, probably due in large part to increased activity from DeFi and other platforms, ”says JPMorgan.
Based on this, JPMorgan believes that a quantity of Ether tokens thus offers greater liquidity compared to bitcoin.
On the other hand, the American bank also highlights the fact that institutional investors want to diversify their portfolios including Ethereum.
Another factor that works in favor of an increase in the ETH price in the future.
JPMorgan therefore has a very positive and optimistic vision for the Ethereum cryptocurrency, an ETH price which should soon pass the symbolic mark of $ 3,000.
New El Dorado for investment banks like JPMorgan, the crypto sector is now in full swing.
Sources have revealed that JPMorgan is expected to launch a Bitcoin fund this summer.