JPMorgan said crypto investors should hold onto Ethereum instead of Bitcoin as interest rates rise, because blockchain has more uses, such as powering decentralized finance and NFTs.
JPMorgan analysts, led by market strategist Nikolaos Panigirtzoglou, said in a recent report that rising interest rates could pose a problem for Bitcoin as it has traditionally been for gold. Bitcoin exploded in a world of massive bond purchases, flooding the markets with cash and ultra-low interest rates.
Many market experts bitcoinIt sees ‘ as “digital gold” and a hedge against inflation. But central banks around the world are cutting their support for economies in an attempt to slow down strong inflation. That means interest rates and bond yields are poised to rise.
The Bank of England said on Thursday that interest rates should rise “in the coming months”. On Wednesday, the Federal Reserve cut its monthly bond purchases to $120 billion.
Accordingly, JPMorgan Ethereum He said it might be better for him to hold ETH, the world’s second-largest cryptocurrency running on its blockchain. This is because it has a lot more uses than Bitcoin and therefore interest will remain stronger. “The rise in bond yields and the eventual normalization of monetary policy are putting downward pressure on Bitcoin as a form of digital gold, just as higher real returns put downward pressure on traditional gold,” Panigirtzoglou said. made the statement.
Analysts of the bank also said that due to the increasing importance of environmental concerns in investing, Ethereum may be a better bet in the long run. Both cryptocurrencies currently have a verification and security system that uses large amounts of electricity. However, Ethereum plans to switch from this system to one that consumes much less energy by the end of 2022.
“Investors [çevresel, sosyal yatırımlara] its greater focus has shifted attention from the energy-intensive Bitcoin blockchain to the Ethereum blockchain.”
However, JPMorgan said both cryptocurrencies appear to be overvalued at the moment, as they are too volatile for most institutional investors.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.