Multinational bank and asset manager JP Morgan has published a note to investors stating that Ethereum is outperforming Bitcoin due to improvements in liquidity and a higher turnover on the public Ethereum blockchain.
“Both BTC and ETH experienced a comparable liquidity shock earlier this month which triggered a comparable de-levering event of their respective derivatives markets in subsequent days.” The note began.
“But ETH spot depth has recovered quicker and if anything liquidity conditions on some exchanges is better than prior to that event.
“Higher turnover on the ETH public blockchain means a noticeably higher fraction of those tokens can be considered highly liquid, further blunting the impacts of futures liquidations.
“This suggests that ETH valuations may be less dependent on levered demand than BTC, a technical but occasionally important tailwind moving forward.”
eToro market analyst Simon Peters has attributed the recent rise in Ethereum to a wave of demand from institutional investors.
He said: “Underlying this is demand from institutional investors. While they may now have some exposure to Bitcoin, institutions are now diversifying their exposure and Ethereum is the natural next pick, and that leaves the second biggest cryptoasset by market cap well placed to benefit further.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.