JPMorgan says ethereum is a better bet than bitcoin as interest rates rise, due to the boom in DeFi and NFTs Ethereum
key takeaways:
Crypto investors should hold ethereum rather than bitcoin in an era of rising interest rates, JPMorgan analysts said.
Ethereum is at the heart of decentralized finance and the market for non-fungible tokens, two booming areas.
Bitcoin is more akin to digital gold, which is likely to fare less well as interest rates and bond yields rise.
JPMorgan analysts, led by market strategist Nikolaos Panigirtzoglou, said in a recent report that rising interest rates could pose a problem for bitcoin, just as they traditionally do for gold.
The Bank of England on Thursday said interest rates would have to rise "over the coming months." The Federal Reserve on Wednesday cut back its $120 billion a month of bond purchases.
Bitcoin has boomed in a world of ultra-low interest rates and massive bond-buying, which have flooded markets with cash and spurred concerns about overheating. Many see bitcoin as "digital gold" and a hedge against inflation.
"The rise in bond yields and the eventual normalization of monetary policy is putting downward pressure on bitcoin as a form of digital gold, the same way higher real yields have been putting downward pressure on traditional gold," Panigirtzoglou wrote.
However, JPMorgan has said that both cryptocurrencies currently appear overvalued, as they're far too volatile for most institutional investors.
Ethereum traded at $4,498 on Friday, just off an all-time high of above $4,600 touched earlier this week. Bitcoin was trading at $61,501, down from a record high of $66,000 in October.