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Investment bank JPMorgan has published a report explaining why ether is outperforming bitcoin. Citing several key reasons, the firm concluded that \u201cthere is evidence of more resilient liquidity, less reliance on derivatives markets to transfer and warehouse risk, and more durable underlying demand base \u2013 for now at least.\u201d<\/strong><\/p>\n JPMorgan published a report on Tuesday entitled \u201cWhy is ETH<\/a> outperforming?\u201d The analysts with the firm\u2019s Fixed Income Strategy for the U.S. wrote:<\/p>\n In recent days, one of the more interesting developments in cryptocurrency markets has been the outperformance of ether (ETH<\/a>) relative to other tokens.<\/p>\n<\/blockquote>\n Noting that bitcoin is \u201cmore of a crypto commodity than currency,\u201d JPMorgan said that \u201cETH<\/a> is the backbone of the crypto-native economy and therefore functions more as a medium of exchange.\u201d The analysts then asserted that \u201cTo the extent owning a share of this potential activity is more valuable \u2026 ETH<\/a> should outperform BTC<\/a> over the long run.\u201d<\/p>\n While the JPMorgan analysts noted that \u201cBoth BTC<\/a> and ETH<\/a> markets experienced a comparable liquidity shock earlier this month which triggered a comparable de-levering of their perspective derivatives market in subsequent days,\u201d they pointed out:<\/p>\n But ETH<\/a> spot market depth has recovered quicker and if anything liquidity conditions on some exchanges is better than prior to the event.<\/p>\n<\/blockquote>\n The analysts further explained that \u201cHigh-frequency cash\/futures basis pricing reveals a much smaller impact in ETH<\/a> markets despite optically comparable net liquidations.\u201d Furthermore, \u201copen interest data also suggests that the other side of these trades was easier to source.\u201d<\/p>\n <\/ins> <\/ins> <\/p>\n The report continues: \u201cHigher turnover on the public ETH<\/a> blockchain means a noticeably higher fraction of those tokens can be considered highly liquid, further blunting the impact of futures liquidations.\u201d<\/p>\n The JPMorgan analysts further detailed: \u201cIn the case of ether versus bitcoin, there is evidence of more resilient liquidity, less reliance on derivatives markets to transfer and warehouse risk, and more durable underlying demand base \u2013 for now at least.\u201d<\/p>\n The report adds that \u201cIn combination with the continued growth of Defi and other components of the ethereum-based economy, this suggests some technical but occasionally important bullish tailwinds versus bitcoin.\u201d The analysts concluded:<\/p>\n ETH<\/a> valuations may be less dependent on levered demand than BTC<\/a>, a technical but occasionally important tailwind going forward.<\/p>\n<\/blockquote>\nJPMorgan Says Ether Outperforms Bitcoin<\/h2>\n
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