JPMorgan Identifies the Factors Contributing to Bitcoin’s Persistent Dominance

The Block cites a report from JPMorgan analysts that predicts Bitcoin will continue to dominate Ethereum and other alternatives until 2025.

Bitcoin’s dominance is currently at 54%, while Ethereum’s is at 11.14% at the time of writing. The report emphasizes eight critical factors that have the potential to bolster Bitcoin’s continued dominance.

The narrative of Bitcoin as a digital component of “debasing commerce” is believed to continue to attract substantial funds into spot Bitcoin ETFs from both retail and institutional investors, according to analysts.

In contrast, Ethereum-based instruments have garnered only modest interest, with $2.6 billion in investment since their introduction. This suggests that there is a limited demand for exchange-traded funds that are based on altcoins in the future, as per JPMorgan.

MicroStrategy is “only halfway” to achieving its objective of raising $42 billion to acquire Bitcoins, according to analysts. They are of the opinion that the company’s “Plan 21/21” provides supplementary momentum for the dominant cryptocurrency.

JPMorgan proposed that the United States’ decision to establish a cryptocurrency reserve exclusively in Bitcoin could bolster its position. In the past, colleagues at Fidelity Digital Assets predicted that this course of action would be pursued by countries other than the United States.

Analysts cited advancements in Layer 2 solutions for Bitcoin as a fourth factor, which they predict will pose a challenge to platforms such as Ethereum.

For the fifth reason, business blockchain apps that trade digital bonds and settle transactions are moving to private or group blockchains. JPMorgan maintains that these alternatives provide a higher level of privacy and customization, which diminishes the appeal of public blockchains for large institutions.

The emphasis of new initiatives is shifting from token issuance to infrastructure development. According to the report, this represents a departure from the coin-centric strategies that were prevalent during the bull market of 2021-2022. Base serves as an illustration, as it achieved prominence without issuing its own token.

Lastly, analysts observed that, despite the initial success of numerous DeFi projects, user engagement and token prices experienced a decline as the initial excitement subsided. They emphasized the necessity of setting aside additional time to demonstrate the long-term utility of examples such as Friend.tech, Farcaster, and Lens.

Simultaneously, the report authors stated that the cryptocurrency market is currently in a consolidation phase in anticipation of regulatory clarity from the new U.S. administration. They do not exclude the possibility of delays in this process, as authorities are likely to prioritize the resolution of other matters.

It is important to mention that Steno Research anticipated a decrease in Bitcoin’s dominance to 45% by 2025.

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