Ethereum is overpriced according to JP Morgan

by baaaawz

Smart contracts on other blockchains are quickly challenging Ethereum. This is one of the reasons JPMorgan believes Ethereum is overpriced by approximately 60%. But what exactly is it?

Ethereum is overpriced? Let’s look at the numbers first!

JP Morgan performed a worldwide market research through Managing Director Nikolaos Panigirtzoglu, which shows that Ethereum’s present valuation does not reflect reality. According to the article’s writers, Ethereum should be valued no more than $1,500 at the moment.

In reality, JP Morgan’s data appears to be lifted from a Chainalysis analysis and its “Global DeFi Adoption Index,” which was released last month.

As of Q2 2021, institutional investors’ use of DeFi has risen, but not sufficiently for Ethereum to be considered “dominant on its own,” according to the bank’s director.

The fact that more than 60% of DeFi transactions are valued more than $10 million, compared to fewer than 50% of all Bitcoin transactions, demonstrates this rising popularity. Institutions are unquestionably leading the way. Enough for them to decide to alter their blockchain in order to entirely reshuffle the deck, as seen by this graphic.

The DeFi industry is quickly expanding and presently has a total market value of $165.87 billion.

“Large transactions account for too much of DeFi’s activity, suggesting that DeFi is disproportionately popular among large investors compared to cryptocurrencies in general.”

– Nikolaos Panigirtzoglu

Is Ethereum really overpriced?

Nikolaos Panigirtzoglu feels that Ethereum, on which the majority of the DeFi industry is built, is overpriced at its present pricing.

Based on network activity indicators, he believes Ethereum has a reasonable value of around $1,500. As of this writing, ETH is trading at under $3,000, down over 10% in the last 24 hours and 31.5 percent from its all-time high of $4,380 four months ago.

According to Panigirtzoglu, the world’s second-largest network is becoming less appealing at present pricing because of increased competition from Solana (SOL) and Cardano (CARD) (ADA).

What says Nikolaos Panigirtzoglu about the Ethereum price?

“We are looking at the hash rate and the number of unique addresses to try to understand the value of Ethereum. We’re struggling to get past the $1,500 mark. […] The current price expresses an exponential growth in usage and traffic that may not materialize.”

-Nikolaos Panigirtzoglu

It is worth mentioning also that the main advantage Ethereum has, using it as a platform for developing decentralized applications and smart contracts, “could easily be replicated by other networks,” he continued.

“It’s not unique. You already see competition from Binance, competition from Solana. And there will be more in the future.”

-Nikolaos Panigirtzoglu

The majority of DeFi’s popularity was driven by experienced crypto investors searching for new sources of revenue. Over time, investors from many walks of life joined in, and it eventually became controlled by institutions.

It remains to be seen if DeFi will be embraced by the general population in the future years, or whether it will remain a speculative and investment instrument for the elite. In any event, Nikolaos Panigirtzoglu appears to have forgotten that JP Morgan spent $65 million on ConsenSys, which is powered by Ethereum, last April.


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