In the latest report, banking giant JPMorgan has said that Ethereum’s high gas fee and network congestion are putting a big risk for the smart contracts platform. JPMorgan said that this could be a “problem for Ethereum’s valuation”.
It specifically added that Ethereum could be losing its NFT market share to rival Solana which has been gaining massive ground over the last year. If we look at the data, Ethereum’s NFT market share has already dropped to 80% from 95% at the beginning of 2021.
In the report, first shared by Business Insider, JPMorgan said that NFTs are the “fastest-growing universe in the crypto ecosystem”. Thus, If the loss of its NFT share starts looking more sustained in 2022, that would become a bigger problem for Ethereum’s valuation”.
The JPMorgan analysts also noted that data shows NFT players have been moving from Ethereum to Solana amid the latter’s faster transaction speeds and low costs.
Ethereum At the Risk of Losing DeFi Dominance
Another area that we need to focus upon is Ethereum’s falling share in the world of decentralized finance (DeFi). Last week, in a note to clients, JPMorgan analysts led by Nikolaos Panigirtzoglou, wrote:
“It looks like, similar to DeFi [decentralized finance] apps, congestion and high gas fees has been inducing NFT applications to use other blockchains”.
Ethereum has a big challenge ahead of it to quickly scale to the PoS Ethereum 2.0 or end up losing its market share to other competitors like Solana, Avalanche, Cardano, and others.
Much recently, we have been also seeing that Ethereum’s price has been moving sideways amid the recent crypto market consolidation. As per our technical analysis, the ETH price is currently trading at crucial support levels and is at risk of seeing another 20% price drop. As the Ethereum open interest tanks to a 3-month-low, here’s what the investor sentiment suggests.
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