A report JPMorgan published describing why Ethereum (ETH) surpasses Bitcoin (BTC)
The firm citing numerous critical analyses, concluding that,
“There is evidence of more resilient liquidity, less reliance on derivatives markets to transfer and warehouse risk, and more durable underlying demand base; for now at least.”
JPMorgan Announces Ethereum Outperforms Bitcoin
Earlier this week, JPMorgan published a report entitled “Why is ETH outperforming?” The analysts with the firm’s Fixed Income Strategy for the U.S. wrote:
One of the most exciting progress in cryptocurrency markets has been the high performance of Ethereum relative to other tokens.
Noting that Bitcoin is “more of a crypto commodity than currency.” JPMorgan stated that; “ETH is the backbone of the crypto-native economy and therefore functions more as a medium of exchange.”
The analysts then stated that,
“To the extent owning a share of this potential activity is more valuable … ETH should outperform BTC over the long run.”
While the JPMorgan analysts remarked that “Both BTC and ETH markets experienced a comparable liquidity shock earlier this month. This triggered a comparable de-levering of their perspective derivatives market in subsequent days,” they indicated:
But ETH spot market depth has recovered quicker, and if anything, liquidity conditions on some exchanges are better than before the event.
The analysts emphasized that “High-frequency cash/futures basis pricing reveals a much smaller impact in ETH markets despite optically comparable net liquidations.”
Moreover, “open interest data also suggests that the other side of these trades was easier to source.”
The other side of these trades was easier to source
The statement proceeds:
“Higher turnover on the public ETH blockchain means a noticeably higher fraction of those tokens can be considered highly liquid, further blunting the impact of futures liquidations.”
The JPMorgan analysts elaborated further, “In the case of ether versus bitcoin, there is evidence of more resilient liquidity, less reliance on derivatives markets to transfer and warehouse risk, and more durable underlying demand base – for now at least.”
The report continues that,
“In combination with the continued growth of Defi and other components of the ethereum-based economy, this suggests some technical but occasionally important bullish tailwinds versus bitcoin.”
The analysts closed the report stating that:
ETH valuations may be less dependent on levered demand than BTC, a technical but occasionally significant tailwind in the future.
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