Ether on $4,000 to hit a new record high JPMorgan Chase six logic to continue to bearish

Ether money flow trajectory improves after April launch of 4 ETFs

Ether stood on the $4,000/coin integer mark, renewing a new record high and accumulating a gain of over 440% so far this year.

For Ether’s rally, a report by JP Morgan analyst Joshua Young on April 27th with the headline “Why is Ether running away with it? as the headline offered one explanation. The report argues that ethereum’s valuation may be less dependent on leveraged demand compared to bitcoin, a technical driver as well as an occasionally important one.

Shortly after, another JPMorgan analyst, Nick Panagirtzoglou, released his latest report this Friday, acknowledging that “Ether’s recent rise has been particularly impressive” and laying out the logic behind his bullishness on Ether.

In the section discussing ethereum, the report mentions that while bitcoin prices have been hovering below $60,000 recently, the overall cryptocurrency market has expanded significantly in recent weeks, led by ethereum and other smaller cryptocurrencies.

The fact is that both retail and institutional demand metrics have been accelerating recently. the trajectory of ethereum flows has improved following the launch of four ETFs in April. When comparing these metrics to Bitcoin, it looks even more impressive.

When it comes to the logic behind Ether’s rise, Nick Panagirtzoglou draws from six main factors.

  1. Last week the European Investment Bank (EIB) issued €100 million of two-year, zero-coupon digital notes using the Ether blockchain, its first digital bond issue. The deal is designed to be a series of bond tokens on the Ether blockchain, with investors using traditional fiat currency to buy and pay for security tokens. The EIB’s move is undoubtedly significant, reaching the mark of a mainstream official institution’s recognition of the Ether blockchain.

2, Canada’s Purpose Investments launched its first ethereum ETF (ETHH) on April 20, and three more ethereum ETFs were launched back-to-back in the same month.

  1. There is a structural decline in ethereum supply due to the upcoming introduction of the EIP 1559 protocol this summer. the EIP 1559 protocol is mainly a drastic change in the way transaction fees are calculated, making them more predictable on the ethereum blockchain by introducing an automatically calculated base fee. According to the JPMorgan report’s explanation, this fee is immediately burned once paid in Ether, which means less supply of Ether in the future.

With Ether circulation growing at 5% per year for the past three years, a theoretical unlimited supply of Ether has been a concern. By burning Ether through the base fee, the EIP 1559 protocol may reduce the change in Ether circulation to 1-2% per year.

  1. The huge investor focus on ESG has shifted attention from the energy-intensive Bitcoin blockchain to the Ether blockchain, with Ether 2.0 expected to become more energy efficient by the end of 2022. Ether 2.0 shifts from an energy-intensive Proof-of-Work validation mechanism to a Proof-of-Stake mechanism. As a result, less computing power and energy consumption is required to maintain the Ethernet network.
  2. The dramatic growth of NFT (Non-Fungible Token) and stable coins in recent months has increased the use of easy collapse parties, and Ether has dominated the DeFi (decentralized finance) ecosystem.

6, Finally the report mentions that higher US bond yields and the eventual normalization of monetary policy are combining to put downward pressure on Bitcoin as digital gold. Ether, on the other hand, is deriving value from its applications, from DeFi to gaming, from NFTs to stablecoins, and so is not as vulnerable to higher real yields as Bitcoin.

But the report also warns of potential risks. Market cap expansion in the cryptocurrency market over the past few weeks has been concentrated on the likes of ethereum and dogcoin, and bitcoin’s share of the overall cryptocurrency market has fallen from 60% to 45% of the market cap over the past month.

Panigirtzoglou believes that this share decline has been somewhat driven by increased institutional interest in ethereum, but also somewhat driven by demand for other cryptocurrencies with individual investments. This has some similarities to the bubble that emerged in the Bitcoin market in December 2017, when Bitcoin’s market share fell from 55% to 35%.

Ether on ,000 to hit a new record high JPMorgan Chase six logic to continue to bearish

Image credit: JPMorgan Chase Image credit: JPMorgan Chase

ZeroHedge, on the other hand, mentions that there are those who disagree with this view, and some who experienced the bitcoin decline in 2018 at the beginning, that the situation then had nothing to do with retail investors, but rather with the Fed’s tightening policy – the Fed raised interest rates three times in 2017 and four times in 2018. That means a huge difference between now and then is the Fed, which now has no intention of tapering QE or raising interest rates. If you really want to make a comparison based on the Fed’s last rate hike cycle, then cryptocurrencies like Bitcoin and Ether may not top out until 2024.

Posted by:CoinYuppie,Reprinted with attribution to:
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