Investment bank JPMorgan released a report explaining why Ether outperforms Bitcoin. Citing several main reasons, the company concluded that “at least for now, there are signs of more stable liquidity, less reliance on derivatives markets for transfer and inventory risk, and a more permanent underlying demand base.”
JPMorgan Says Ether Outperforms Bitcoin
JPMorgan released a report on Tuesday entitled “Why is ETH doing better?” The analysts with the company’s fixed income strategy for the US wrote:
In the past few days, one of the most interesting developments in the cryptocurrency markets has been the outperformance of Ether (ETH) compared to other tokens.
JPMorgan noted that Bitcoin is “more of a crypto commodity than a currency” and said that “ETH is the backbone of the crypto-native economy and therefore acts more as a medium of exchange”. The analysts then claimed, “To the extent that it is more valuable to own a stake in this potential activity, ETH should outperform BTC in the long run.”
While the JPMorgan analysts noted that “both the BTC and ETH markets experienced a comparable liquidity shock earlier this month, which triggered a comparable unlapping of their prospective derivatives market in the following days,” they pointed out:
However, the depth of the ETH spot market has recovered faster and, if anything, liquidity conditions on some exchanges are better than they were before the event.
The analysts further stated that “the high-frequency pricing on a cash / futures basis shows a much smaller impact on the ETH markets despite visually comparable net liquidations.” Additionally, “Open Interest data also suggests that the other side of these trades was easier to come by.”
The report continues: “Higher turnover on the public ETH blockchain means that a significantly higher proportion of these tokens can be viewed as highly liquid, which further mitigates the effects of futures liquidations.”
The JPMorgan analysts continued: “In the case of Ether versus Bitcoin, there are indications of more stable liquidity, less reliance on derivatives markets for transfer and inventory risk, and a more permanent underlying demand base – at least for now.”
The report adds, “Combined with the continued growth of Defi and other components of the Ethereum-based economy, this suggests some technical, but occasionally important, bullish tailwinds against Bitcoin.” The analysts concluded:
ETH valuations may be less dependent on lever demand than BTC, a technical but occasionally important tailwind for the future.
Do you agree with JPMorgan that Ether outperforms Bitcoin? Let us know in the comments below.
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