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JPMorgan Sees Crypto Becoming 'Increasingly Relevant to Financial Services' in 2022, Coinbase (COIN) a Direct Beneficiary of This Trend

January 7, 2022 11:26 AM EST
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JP Morgan analyst Kenneth B. Worthington sees 2022 as a year when cryptocurrency markets will become increasingly relevant to financial services.

Even though there was initial unwillingness to accept cryptocurrencies as something relevant, JP Morgan included, lately, we are seeing more and more mainstream investors and companies getting into cryptocurrency markets.

Worthington takes notes of the increasing number of (new) Layer-1 chains, the introduction of Layer-2 and the expected mid-2022 Ethereum (ETH) merge, which will all help crypto tech become more relevant.

Ultimately, this will lead to transactions becoming easier and faster, so it’s clear why JPMorgan analysts see 2022 as the year of financial tokenization.

“The applications from crypto have only just begun. Web3.0, greater use of NFTs and tokenization are in the line-of-sight for 2022. As financial analysts, we are most excited about the implications for financial services and see the tokenization and fractionalization as holding particularly large promise as transactions speeds in crypto become more competitive with trad-fi networks. DeFi was a bit of a flop in 2021, but still has strong potential in 2022 and beyond,” Worthington wrote in a client note.

The analyst also believes that Ethereum merge and layer 2.0 introduction will not only speed up the transactions but will aim to significantly cut energy consumptions, which will most likely attract even the investors concerned about Bitcoin’s (BTC) carbon footprint.

JP Morgans see the development of the crypto ecosystem happening in three stages: 1)Bitcoin, 2) Ethereum and Smart Contracts, and 3) Tokens and the Metaverse.

When it comes to the direct beneficiaries of the rapidly growing crypto ecosystem, Worthington sees Coinbase Global (NASDAQ: COIN) as a top player.

“This primer indicates to us that the use cases for the cryptomarkets will continue to grow and new projects and tokens with more and different use cases will surface. With these projects attached to tokens and Coinbase a leading exchange to buy and sell tokens, we see Coinbase as a leading direct beneficiary of cryptomarket growth,” Worthington added.

By Senad Karaahmetovic | [email protected]



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