We are at that time of the year when financial analysts crunch deep numbers and roll out the red carpet for the coming year with fresh foresight. And who better to do it than global financial houses – JPMorgan Chase and Goldman Sachs.
In a report published by JPMorgan on the future outlook for crypto markets, the investment bank paints a positive picture with a greater crypto adoption from mainstream investors and companies expected in 2022.
“The applications from crypto have only just begun. Web3.0, greater use of NFTs tokenization are in the line-of-sight for 2022,” wrote JPMorgan research analysts Kenneth Worthington and Reginald Smith in the report.
Crypto Increasingly Relevant To Financial Services
According to JPMorgan, 2021 has been an excellent year for NFT, but 2022 is possibly the year of the blockchain bridge or financial tokenisation. “As such, we see the cryptocurrency markets as increasingly relevant to financial services,” observed Worthington and Smith.
This year, the report hinted at a faster evolution of the crypto markets, particularly around financial services, addressing critical blockchain scalability and interoperability issues. Scheduled upgrades to the Ethereum blockchain and the growth of layer-2 solutions would increase capacity and transaction speeds.
“The use cases for crypto markets will continue to grow and new projects and tokens with more and different use cases will surface.” the report noted.
Ethereum Over Bitcoin
Interestingly, JPMorgan’s report weighted Ethereum’s use cases far more heavily than Bitcoin. “If bitcoin is of digital value, Ethereum is a digital canvas or software platform that allows developers to create new crypto and traditional applications.”
Ethereum layer-1 network currently favours security over scalability with transactions as low as 15 per second compared to Mastercard’s 5000 per second. However, layer-2 solutions built on top of Ethereum blockchain will scale for higher throughput without compromising security or decentralization.
But Ethereum’s present dominance is likely to fade. “Solana is much faster than Ethereum. Cardano is more scalable. Polkadot is more interoperable,” the report noted. While alternatives are chipping away Ethereum’s market share, its market cap continues to grow exponentially.
Bitcoin Will Take Away Gold’s Market Share: Goldman Sachs
On another positive note for crypto, Goldman Sachs’s research analyst Zach Pandl outlined a hypothetical scenario where bitcoin grabs a 50% share of the “store of value” market from gold, and its price reaches over $100,000 in 2022.
Store of value assets usually do not lose value (depreciate) over time, like cryptocurrencies and precious metals. With a $700 billion market cap compared to gold’s $2.6 trillion, bitcoin occupies 20% of the ‘store of value’ market share.
“Bitcoin may have applications beyond simply a “store of value” – and digital asset markets are much bigger than Bitcoin – but we think that comparing its market capitalization to gold can help put parameters on plausible outcomes for Bitcoin returns,” Goldman Sachs’ report noted.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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