JPMorgan Analyst Says Crypto Market Will Recover And Cryptocurrency Industry Will Be More Stable

JAKARTA – The decline in the crypto market in the last few months is said to be recovering soon. One factor in the recovery was driven by the completion of The Merge Ethereum's transition from a Proof-of-Work (PoW) to Proof-of-Stake (PoS) model this year, according to a multinational investment bank JPMorgan Chase.

Currently, Bitcoin is up more than 35% compared to June when BTC hit its lowest level. Likewise, the number two crypto, Ethereum has jumped 95%. The overall market cap at the time was around $880 billion, while it currently stands at $1.16 trillion, according to a CryptoPotato report.

Further, JPMorgan analysts believe that the crypto industry will recover due to two factors. First, this sector will be cleaner because it has succeeded in limiting the entry of failed projects such as Terra (LUNA). As is known, last May, stablecoins Terra USD (UST) and Terra (LUNA) fell by more than 99%.

The sharp decline caused panic in the crypto market environment. Encouraging investors to sell their UST reserves so Terra started minting more LUNA tokens to withstand the sharp drop in UST prices. However, the attempt failed. UST and LUNA fell.

Terra's collapse had a domino effect on the associated company, Three Arrows Capital. Then other companies also collapsed like Celsius, BlockFi, and others.

The second factor that is considered to be creating stability in the crypto industry is The Merge Ethereum. Analysts assess Ethereum's efforts to restore investor confidence. Experts also believe that the bear market phase has finally come to an end.

“However, we think the real driver is The Merge Ethereum and the positive data following the launch of the Sapolia test net in early July and the Ropsten test net in June, which suggests the merger is feasible in 2022", according to JPMorgan.

If The Merge is complete, Vitalik Buterin claims the Ethereum blockchain “will be able to process 100,000 transactions per second.” This is a significant improvement on the Ethereum network which can currently only process 15-20 transactions.

The Merge itself is one of the series in Ethereum development before continuing to the next stage which includes The Surge, The Verge, The Purge, and The Splurge.

However, it is not known for certain whether The Merge will go as planned or not. On the other hand, several stablecoin issuers such as Tether (USDT) and Circle (USDC) announced their support for the Ethereum transition process.