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Crypto analysts have long been predicting that the major upgrades coming to the Ethereum network could push Ether’s (ETH) price even higher. JPMorgan analysts also believe that the upgrades could help quadruple the value of crypto staking niche in just four years.
While JPMorgan CEO Jamie Dimon is a known crypto skeptic, some of the bank’s senior analysts expressed optimism for the future of blockchains such as Bitcoin and Ethereum as these networks become more energy efficient with the upgrades, according to Forbes. In a note released on Wednesday, JPMorgan analysts led by Kenneth Worthington said that with more efficient networks, crypto staking could gain traction as both retail and institutional investors use it to generate additional revenue.
The crypto staking industry, where investors can earn more cryptocurrency by putting up or stake their own tokens, is currently valued at around $9 billion. JPMorgan analysts predict that the industry could grow to 20 billion next year following the launch of Ethereum 2.0 and double again to $40 billion by 2025, according to Business Insider.
This could mean additional revenue for crypto platforms as well. For instance, JPMorgan analysts expect Coinbase to earn around $500 million a year in revenues from crypto staking by 2025.
“We see staking as a growing revenue stream for cryptocurrency intermediaries such as Coinbase and a source of income for retail and commercial owners of cryptocurrencies utilizing the proof-of-stake protocol,” JPMorgan said in the note. “The opportunities to 'earn' will grow meaningfully with the ethereum merge anticipated for later 2021, which will boost the size of the proof-of-stake ecosystem.”
With the current low-interest rates, crypto staking yield will become more attractive to investors. “Yield earned through staking can mitigate the opportunity cost of owning cryptocurrencies versus other investments in other asset classes such as US dollars, US Treasuries, or money market funds in which investments generate some positive nominal yield,” the analysts added. “In fact, in the current zero rate environment, we see the yields as an incentive to invest.”
