Investment bank JPMorgan has published a report explaining why ether is outperforming bitcoin. Citing several key reasons, the firm concluded that â€œthere is evidence of more resilient liquidity, less reliance on derivatives markets to transfer and warehouse risk, and more durable underlying demand base â€“ for now at least.â€
JPMorgan Says Ether Outperforms Bitcoin
JPMorgan published a report on Tuesday entitled â€œWhy is ETH outperforming?â€ The analysts with the firmâ€™s Fixed Income Strategy for the U.S. wrote:
Noting that bitcoin is â€œmore of a crypto commodity than currency,â€ JPMorgan said that â€œETH is the backbone of the crypto-native economy and therefore functions more as a medium of exchange.â€ The analysts then asserted that â€œTo the extent owning a share of this potential activity is more valuable â€¦ ETH should outperform BTC over the long run.â€
While the JPMorgan analysts noted that â€œBoth BTC and ETH markets experienced a comparable liquidity shock earlier this month which triggered a comparable de-levering of their perspective derivatives market in subsequent days,â€ they pointed out:
The analysts further explained that â€œHigh-frequency cash/futures basis pricing reveals a much smaller impact in ETH markets despite optically comparable net liquidations.â€ Furthermore, â€œopen interest data also suggests that the other side of these trades was easier to source.â€
The report continues: â€œHigher 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.â€
The JPMorgan analysts further detailed: â€œIn 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 â€“ for now at least.â€
The report adds that â€œIn 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.â€ The analysts concluded:
Do you agree with JPMorgan on ether outperforming bitcoin? Let us know in the comments section below.
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