Cryptocurrency : JPMorgan analysts say Ethereum 2.0 could boost cryptocurrency adoption and staking industry

The Ethereum update has generated a lot of expectation in the cryptocurrency market. This is because the activities on its blockchain are expected to run with greater energy efficiency, and therefore could induce more popularity. However, there are those who remain suspicious about it, and one of them has been the CEO of JPMorgan, Jamie Dimon. But, two senior analysts at JPMorgan support the first argument in a recent post about the future of Ethereum.

However, even if the CEO thinks that way, this does not imply that JPMorgan has not done research on cryptocurrencies before. For example, since 2018 they have ventured into this sector through their Blockchain Center of Excellence. Then, in 2019, the bank launched its own stablecoin, JPMCoin. Finally, in March, JP Morgan even began offering its clients exposure to bitcoins.

Therefore, it is not surprising that there are analysts who are dedicated to finding out and making forecasts about the future of this or that cryptocurrency. In this case, JPMorgan analysts assume that Ethereum 2.0’s Proof of Stake will gain traction as a source of income for institutional and retail investors alike.

What does the JPMorgan analyst report say about the future of Ethereum?

Currently, the Bitcoin and Ethereum blockchains use a demanding process called Proof of Work (PoW) to ensure that all transactions on the network are valid. However, scalability is not its best strong suit, and it is also very power consuming.

In light of this, Ethereum is shifting from proof-of-work to proof-of-stake (PoS), where investors lock their funds on the blockchain in exchange for rewards.

The authors predict in the report that the switch from Ethereum to PoS after the Ethereum 2.0 launch will spur the adoption of the alternative consensus mechanism. And it is something that has not only been considered in JPMorgan, since in fact this is one of the underlying reasons for the update.

“The return obtained through participation can mitigate the opportunity cost of owning cryptocurrencies against other investments in other asset classes such as US dollars, US Treasuries.” They even talked about money market funds in which investments generate a positive nominal return. “In fact, in today’s zero-rate environment, we see returns as an incentive to invest,” the report says.

In the same way, we have to wait to see what happens. Why? Simple, because the expected launch date of Ethereum 2.0 is in 2022. The current market capitalization of PoS tokens exceeds $ 150 billion, according to the report.

Things to keep in mind

Although this is the view of JPMorgan analysts, it must be remembered that Ethereum is part of a volatile market. Whether with the use of PoW or PoS, volatility continues to exist. And so more concerns may arise along the way.

However, as the cryptocurrency market matures and volatility decreases, staking will likely become a more reliable source of income. What do you expect from the Ethereum 2.0 update? Do you think JPMorgan analysts are correct when they say that this change could potentially increase crypto adoption?

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