US banking giant JPMorgan is calling leading smart contract pltform Ethereum (ETH) a better bet than Bitcoin (BTC) this market cycle.
Business Insider reports that analysts from JPMorgan say the Federal Reserve’s plans to raise interest rates could pose a big problem for Bitcoin.
On Thursday, the Bank of England said that interest rates would have to rise over the coming months. The Fed reportedly will begin tapering its $120 billion per month spending on bond purchases.
Market strategist Nikolaos Panigirtzoglou says that the downward pressure being put on BTC and typical inflation hedges like gold make ETH a more attractive investment, as its value is primarily derived from its high number of decentralized applications and use cases.
“The rise in bond yields and the eventual normalization of monetary policy is putting downward pressure on Bitcoin as a form of digital gold, the same way higher real yields have been putting downward pressure on traditional gold.
With Ethereum deriving its value from its applications, ranging from DeFi to gaming to NFTs and stablecoins, it appears less susceptible than Bitcoin to higher real yields.”
The bank’s analysts say that Ethereum could also prove to be the better long-term bet as environmental concerns continue to grow more relevant to investors.
“The greater focus by investors on [environmental, social and governance investing] has shifted attention away from the energy-intensive Bitcoin blockchain to the Ethereum blockchain.”
Earlier this week, JPMorgan challenged the popular $100,000 Bitcoin price target for Q4, citing too much volatility in the markets currently. From the bank’s perspective, BTC’s price has been rising primarily due to investors’ concerns over rising inflation in the US.
Both crypto assets have been hovering near their previous all-time highs over the past week. Currently, Bitcoin is trading at $61,242, according to CoinGecko, while Ethereum is sitting right above its previous all-time high, trading at $4,498.Don't Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
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