JPMorgan Paints Challenging Picture For The Crypto Market in 2024: Will Spot ETFs, BTC Halving, ETH Updates Help Or Hinder?

JPMorgan Chase & Co JPM expressed a cautious stance towards the cryptocurrency market heading into 2024.

However, the bank anticipates Ethereum's Ether ETH/USD to surpass Bitcoin BTC/USD and other digital currencies in performance, attributing this to an upcoming Ethereum blockchain upgrade aimed at enhancing scalability.

What Happened: In its latest report, JPMorgan discussed the potential impact of the U.S. Securities and Exchange Commission's (SEC) decision on the approval of spot Bitcoin exchange-traded funds (ETFs), according to Coindesk.

The bank suggested this decision, expected early next year, might not significantly boost the market.

"There is a high chance of buy-the-rumor/sell-the-fact effect once the SEC approves spot Bitcoin ETFs early next year," noted Nikolaos Panigirtzoglou and his team of analysts.

JPMorgan's report also highlighted the current market sentiment, stating, "Excessive optimism by crypto investors arising from an impending approval of spot Bitcoin ETFs by the SEC has shifted Bitcoin to the overbought levels seen during 2021."

The report further mentioned that the anticipated Bitcoin halving event in 2024 is already factored into market prices.

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The focus then shifted to Ethereum's upcoming EIP-4844 upgrade, also known as proto-danksharding.

This upgrade is a step forward in the sharding process, which divides the network into multiple segments to boost transaction speeds.

Proto-danksharding introduces a new type of transaction to Ethereum, enhancing data storage capacity on the network.

What's Next: Despite some resurgence in venture capital funding in the fourth quarter of 2023, JPMorgan described this as "rather tentative."

The report also touched upon the progress in decentralized finance (DeFi), noting some improvements but emphasizing the sector's failure to make significant inroads into traditional finance.

This integration is crucial for the crypto ecosystem's evolution from crypto-native to real-world applications, the report concluded.

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