Bitcoin may be hogging the headlines but America’s biggest bank JPMorgan says Ethereum, the world’s second-most valuable cryptocurrency, might be the better bet as interest rates start climbing.
In a recent report, analysts at JPMorgan state that Ethereum’s growing number of uses — peer-to-peer lending, NFTs, gaming, stablecoins — should help it maintain its value in a climate of rising interest rates.
Bitcoin, on the other hand, could be set for another slide.
“The rise in bond yields and the eventual normalization of monetary policy is putting downward pressure on bitcoin as a form of digital gold, the same way higher real yields have been putting downward pressure on traditional gold,” the report says.
As the largest cryptocurrency exchange in the U.S., Coinbase is in a prime position to benefit from a rise in Ethereum trading, earning a transaction fee on every sale or purchase.
Many cryptocurrencies sold on the exchange are powered by the Ethereum blockchain, which means a bet on Coinbase is essentially a bet on Ethereum itself. Their futures are tightly linked.
One thing you want to see in any stock is a capacity for growth, and Coinbase has that in spades. In the second quarter of 2020, Coinbase had 1.5 million monthly users; a year later, that figure hit 8.8 million. Over that same span, net revenue grew from $178 million to $2.03 billion.
