JP Morgan, America's largest investment bank, said Ethereum is the preferred investment option, arguing ETH's overestimation in comparison to BTC.
JP Morgan's market strategist Nikolaos Panigirtzoglou offered a new analysis in a recent report. He argued that crypto investors should be holding Ethereum rather than Bitcoin as interest rates rise because the blockchain has more uses such as powering decentralized finance and non-fungible tokens. Rising interest rates could pose a problem for Bitcoin, just as they traditionally do for gold.
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. But central banks around the world are cutting back their support for economies in an effort to cool strong inflation. That means interest rates and bond yields are poised to start rising, according to Business Insider.
As Panigirtzoglou argued, rising interest could make Bitcoin lose long-term value in the eyes of investors. This comes after the Federal Reserve announced that it would scale back its bond-purchasing program starting this month. Thus, the rise in the price of Bitcoin was largely driven by the institutional reallocation of funds from gold. In response to the COVID pandemic and business restrictions, companies sought help from rising inflation. Like Mark Mobius noted a few days ago, the supply in US dollars has already increased by 30%.
Thus, Bitcoin played a crucial role and even began to replace the monetary good. However, Panigirtzoglou concluded that the recent Fed news could cause Bitcoin to lose most of its value proposition.
© 2021, Eva Fox | Tesmanian. All rights reserved.
We appreciate your readership! Please share your thoughts in the comment section below.
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.