U.S. banking giant JPMorgan is calling the leading smart contract platform Ethereum (ETH) a better bet than Bitcoin (BTC) this market cycle.
Business Insider reports that JPMorgan analysts say the Federal Reserve’s plans to raise interest rates could pose a big problem for Bitcoin.
On Thursday, the Bank of England said interest rates are expected to rise in the coming months. The Fed would start cutting spending by $ 120 billion per month on bond purchases.
Market strategist Nikolaos Panigirtzoglou said the downward pressure on BTC and typical inflation hedges like gold make ETH a more attractive investment, as its value stems mainly from its high number of decentralized applications and use cases.
âRising bond yields and the eventual normalization of monetary policy are putting downward pressure on Bitcoin as a form of digital gold, in the same way that higher real yields have put downward pressure on it. traditional gold.
With Ethereum deriving its value from its applications, ranging from DeFi and games to NFTs and stablecoins, it seems less sensitive than Bitcoin to higher real returns.
Analysts at the bank say Ethereum could turn out to be the best bet in the long term as well, as environmental concerns continue to become more relevant to investors.
âThe greater concentration of investors on [environmental, social and governance investing] shifted attention from the energy-intensive Bitcoin blockchain to the Ethereum blockchain.
Earlier this week, JPMorgan challenged the popular Bitcoin price target of $ 100,000 for the fourth quarter, citing too much volatility in the markets currently. From the bank’s perspective, the price of BTC has risen mainly due to investor concerns about rising inflation in the United States.
Both crypto assets hovered near their previous all-time highs over the past week. Currently, Bitcoin is trading at $ 61,242 according to CoinGecko, while Ethereum sits just above its previous all-time high of $ 4,498.
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