In a new research note, traditional finance giant JPMorgan presented a cautious outlook for the cryptocurrency market in 2024. The analysts predicted that ether will outperform Bitcoin, though that’s due more to BTC’s expected underperformance. 

In the research note, a team of analysts led by Nikolaos Panigirtzoglou, said that the anticipated bitcoin halving event in 2024 is likely already factored into the current market price. They noted that the effect of the halving on Bitcoin supply is predictable, and with Bitcoin’s current price hovering around $42,000, the market seems to have already priced in the impact of this event. 

The report suggests that the production cost for Bitcoin mining could rise from about $22,000 to around $44,000 post-halving, potentially leading to a 20% drop in the hash rate and the market exit of miners with higher overheads. 

Despite the wary tone, the report highlighted the potential for Ethereum to show strength in 2024. This optimism stems largely from the anticipated EIP-4844 upgrade, known as “Protodanksharding.” This upgrade is expected to enhance Ethereum’s throughput and fees significantly. 

“We believe that next year Ethereum will reassert itself and recapture market share within the crypto ecosystem,” the analysts wrote. “The main catalyst is the EIP-4844 upgrade or Protodanksharding which is expected to take place during the first half of 2024. We believe that this upgrade will likely prove a bigger step towards improving Ethereum network activity thus helping Ethereum to outperform.”

Read More: Why Macro Investors Won’t Miss the Next Crypto Bull Run

The analysts were guardedly upbeat about the revival of decentralized finance (DeFi) and non-fungible token (NFT) activities,  noting the emergence of new DeFi chains like Aptos, SUI, and Pulsechain, along with the renewed interest in NFTs driven by Bitcoin Ordinals. But they suggested that it’s premature to be overly optimistic about a broad revival in these areas.

A Contrarian View

In a somewhat contrarian view to prevailing market expectations, JPMorgan analysts expressed skepticism about the impact of the potential approval of a spot Bitcoin ETF, arguing that these products might not attract fresh capital into the crypto market. 

Instead, they wrote that such ETFs could shift capital from existing Bitcoin products, like the Grayscale Bitcoin Trust and Bitcoin futures ETFs, into the spot products. This movement could exert severe downward pressure on bitcoin’s price if funds exit the market instead of moving into other bitcoin instruments. The increasingly likely prospect of a spot bitcoin ETF approval sent bitcoin’s price surging over the past 30 days from below $36,000 to over $44,000, according to crypto data aggregator CoinGecko. 

Earlier this month, JPMorgan CEO Jamie Dimon told a U.S. senate hearing that he has “always been deeply opposed to bitcoin, crypto, etc.” and that if he were the government, he’d shut down the crypto industry. Dimon, however, has historically drawn a firm line between “cryptocurrencies” and “blockchain technology.” 

JPMorgan has a division called Onyx that offers a bank-led blockchain platform that facilitates the exchange of digital assets. The bank also has JP Coin, which offers clients faster payments to better manage liquidity. JPMorgan said in October that it was handling $1 billion in transactions in JP Coin. 

Bitcoin was recently trading at $42,878, up more than 1.8% over the last 24 hours. BTC has risen 156% year-to-date. By comparison, ether is changing hands at approximately $2,300, a 3.2% gain from Wednesday same time. ETH is up 92% since Jan. 1. 

Read More: Ledger Library Compromised, Causing Confusion and Panic in Crypto Community