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Investing.com – Analysts at investment bank JP Morgan noted that it is gradually losing its dominance in the decentralized finance (DeFi) ecosystem.
Many cryptocurrency protocols such as, and have emerged as strong competitors in 2021. Thus, Ethereum’s supremacy is likely to erode further in the current year, they add.
Is Ethereum in decline?
Ethereum currently accounts for nearly 65% of DeFi’s market share compared to nearly 100% at the start of 2021. According to experts, Ethereum will only regain strength when the final phase of Sharding – the “most critical development” “for ETH network scaling – will be completed in 2023. By then, projects such as Terra, Binance Smart Chain, Avalanche and Solana may continue to grab market share.
According to analysts at JPMorgan (NYSE :), Ethereum would thus face fierce competition. “In other words, Ethereum is currently in an intense race to maintain its dominance in the application space with the outcome of this race far from a given, in our opinion.”
Yet Ether – Ethereum’s native token and the second largest cryptocurrency by market cap – ended 2021 with a price increase of almost 220%. Nonetheless, analysts argue that its value could decline in the short term due to the weakening of the network’s supremacy in the DeFi sector.
Ethereum would keep an advantage over Bitcoin
JP Morgan, and more specifically its CEO Jamie Dimon, has been one of the biggest opponents in recent years. The leader has repeatedly urged investors to steer clear of the asset, calling it “worthless”. On the other hand, the bank seems to have a completely different stance on Ethereum.
In April of last year, analysts at the financial institution said ETH was outperforming BTC, expecting the trend to continue. According to them, bitcoin is a store of value, while its rival is a technology and the backbone of the entire crypto economy.
Analysts said protocols running on proof of stake mechanisms (as Ethereum aims to become soon) are much more energy efficient than bitcoin, which employs proof of work, and may have an advantage. As such, some investors might be more inclined to invest in ETH rather than BTC.
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