Ethereum has proven to be a force to be reckoned with, and major bank JPMorgan agrees. In terms of performance, Ethereum has outperformed rival Bitcoin, although the latter remains the most valuable cryptocurrency in the field. However, if history is any clue, then Bitcoin may not be on the top for much longer.
JPMorgan analysts recently released a report on cryptocurrencies and their potential. While the note recognizes Bitcoin’s ability, it also puts Ethereum ahead of the leading cryptocurrency for years to come. The report based its reasoning on the utility of both assets. While Bitcoin is good for its monetary policy, Ethereum has proven to be even better.
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Invest in Ethereum
The JPMorgan note outlined how Etheruem could prove to be the better bet compared to Bitcoin in the long run. Bitcoin may still be the most valuable cryptocurrency, but as interest rates go up, Ethereum could end up doing better.
“The rise in bond yields and the eventual normalization of monetary policy are putting downward pressure on Bitcoin as a form of digital gold, just as higher real returns have put downward pressure on traditional gold,” the analysts said.
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This is because as interest and inflation rates rise, more investors will flock to decentralized financial protocols (DeFi), which offer more attractive interest rates than traditional finance. Since most of these DeFi protocols are based on the Ethereum blockchain, this will only lead to greater adoption of the digital asset and give it more room for growth than Bitcoin.
In the note, JPMorgan also points out the emerging NFT, gaming, and stable coins portion of the market. This makes it a “safer” bet than Bitcoin when it comes to investing in cryptocurrencies, which are notorious for their volatility. If interest rates rise, its underlying benefit should be able to maintain its value, the note says.
“Since Ethereum gets its value from its applications, which range from DeFi to gaming to NFTs and stablecoins, it appears to be less prone to higher real returns than Bitcoin.”
Outperformance for the future
Analysts at the world’s leading bank JPMorgan also cited other reasons why Ethereum could end up being a better investment option than Bitcoin. One of them was the fact that the Altcoin consistently performed better than Bitcoin compared to the previous year. The numbers for 2021 alone show a wide range when both digital assets are compared side by side in terms of performance.
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Ethereum grew more than 500% in the year compared to Bitcoin’s 96%. If the asset sustains this rate, it could very well outperform Bitcoin’s market cap over the next five years while generating higher returns for its investors.
In five years, Ethereum has grown to roughly half of Bitcoin’s total market capitalization. Valued at over half a trillion dollars, the digital asset outperformed giants such as Visa, MasterCard and JPMorgan to take 15th place as the most valuable asset in the world.
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