While many investors are rejoicing over the recent rise in bitcoin prices, others are betting that the cryptocurrency’s second fiddle, Ether, will be the big winner of 2024.

While loud voices on cryptocurrency Twitter are predicting the start of another bull run due to bitcoin’s recent resurgence, analysts at JPMorgan wrote in a new report that the coin is overbought.

The report looks at one of the main drivers of bitcoin’s recent rosy performance: the possibility that the Securities and Exchange Commission will approve several dot-com bitcoin ETFs in early January.

Some are predicting that the approval of spot ETFs from TradFi firms like BlackRock and Fidelity will lead to billions of dollars in bitcoin inflows, but JPMorgan believes such optimism is misplaced.

The bank pointed to weak demand for existing spot bitcoin ETFs in Europe and Canada as evidence that this investment vehicle may not gain significant traction in the United States. Instead of raising new capital, spot ETFs will likely utilize capital already invested in bitcoin funds such as Grayscale Bitcoin Trust (GBTC), bitcoin futures ETFs, or bitcoin mining companies.

If Grayscale Bitcoin Trust, the world’s largest bitcoin fund in particular, is allowed to become a spot ETF, existing investors could lock in profits and withdraw up to $2.7 billion from the exchange-traded fund. That could bring prices down a lot, the report said.

‘Recapture market share’
The report also argues that the upcoming halving of bitcoin’s value, which will halve the reward for mining, has already been factored into the price and will not give the coin the boost some are hoping for.

On the other hand, a JPMorgan report says that Ether could surpass Bitcoin in 2024 thanks in part to an upcoming update to the underlying Ethereum blockchain, dubbed EIP-4844 or proto-danksharding. The update is designed to increase throughput and reduce the gas fees charged to those who perform transactions on the network.

“We believe Ethereum will reassert itself and reclaim market share in the cryptocurrency ecosystem next year,” the analysts wrote.

As cryptocurrency prices have plummeted over the past few months, funding has dried up and some venture capital funds have lowered the valuation of some of their biggest cryptocurrency bets by double digits. JPMorgan said there has been a “rebound” in venture funding this quarter, though that still looks preliminary.

Nevertheless, analysts believe that a revival of venture capital activity in the crypto industry could make a significant difference. “If this improvement continues into the first quarter of 2024,” the report says, “it will be a significant development that we believe will mark the end of the crypto winter.