Here's Why JPMorgan Believes Ethereum Will Continue Growing Faster Than Bitcoin

Ethereum ETH/USD recently has outpaced the growth of Bitcoin BTC/USD.

What Happened: According to CoinMarketCap data, Ether gained over 63% of value compared to Bitcoin from 0.030343 BTC per ETH to 0.04957. When it comes to value in dollars, Ethereum's value increased by over 62%, reaching its current value of over $2,767, whereas Bitcoin's increased by a little over 1% to its current price of over $53,475.

According to technical analyst Katie Stockton of Fairlead Strategies, the coin may be aiming for $3,020 next.

He explained that "the breakout from earlier this month dictates a bullish bias beyond the coming weeks, having yielded a measured move projection of ~$3,000."

Stockton also believes that if Ether's breakout does not hold, it could test its 50-day moving average, currently located at $2,027.

This would translate to a downside of 33% from the coin's current price of over $2,757.

See also: Chase You Invest by JP Morgan Review

What Else: JPMorgan analysts think the reason why Ether is growing faster than Bitcoin is that while the latter is more of a commodity competing with gold as a store of value than a currency, Ether is the backbone of the crypto-native economy and a medium of exchange.

The bank's analysis also points out a recent crypto liquidity shock that hit Bitcoin harder. "This liquidity shock originated in the derivatives market, leading to sizable liquidations.

The effect was arguable greater in bitcoin futures, where liquidations of net longs since that event total 23% of the ex-ante open interest; that said, Ether is not behind with 17% of net long liquidations over the same period," the note said.

Ethereum also saw a more dramatic recovery in market depth than Bitcoin, on some exchanges reaching liquidity levels higher than those reported before the recent liquidity shock.

The second-leading cryptocurrency is also less reliant on derivatives than the world's first cryptocurrency, meaning that "the underlying base of long exposure [in ether] is less reliant on leverage," which diminishes how relevant the liquidity shock and liquidations were in the first place.

The analysis also explained that the Ethereum network processes more transactions than Bitcoin, thanks partly to its financial application ecosystem.

See also: How to Buy Ethereum (ETH)

JPMorgan believes that this has far-reaching consequences for the coin's value.

"As a consequence, a higher proportion of Ether tokens behave as if highly liquid than Bitcoin, 11% versus 4% by some estimates over the past month... In a market with significantly higher spot turnover, it is plausible that the underlying base of long exposure is less reliant on leverage in the form of futures and swaps."