Proponents of bitcoin have long argued that it is the equivalent of digital gold as a safe haven in tough economic times. But this equivalence has its dark side: like physical gold, it can go through bad times when inflation takes center stage.
So at least JP Morgan believes it, where they point out that the foreseeable rise in interest rates in the medium term by central banks to control an inflation that seems not to easily subside could harm the world’s first cryptocurrency by capitalization.
“The rise in bond yields and the eventual normalization of monetary policy is pushing down on bitcoin as a form of digital gold, in the same way that higher real yields have been pushing down on traditional gold,” The investment firm’s strategic leader, Nikolaos Panigirtzoglou, said in a report.
In this sense, from JP Morgan they emphasize that ether is a cryptocurrency with more uses and whose value is not so linked to mere speculation but also to the growing use of the ethereum blockchain , where exchange operations such as the purchase of NFTs or for decentralized finance (DeFi).
In addition to this infrastructure, Panigirtzoglou recalls that ethereum plans to significantly reduce the energy investment involved in using the network and mining the currency. The electricity consumption of the bitcoin blockchain has been widely criticized for its environmental impact. And it is that it already supposes more annual expenditure on electricity than what the Netherlands does. And given the growing interest in socially responsible investing, this could weigh down bitcoin in the medium and long term.
In spite of everything, in JP Morgan they consider that both are overvalued. Ethereum is trading at $ 4,400, not far from the $ 4,600 it marked this week setting its new all-time high, while bitcoin remains above $ 60,000, 10% below its record high. However, the coin devised by the mysterious Satoshi Nakamoto has more than double the market capitalization, topping $ 1.1 trillion.