- A report from JPMorgan analysts pointed to a tentative recovery in DeFi and NFTs.
- But analysts warn against premature optimism.
- According to their report, there has been a notable increase in NFT sales and an increase in total value locked in DeFi.
JPMorgan analysts led by Nikolaos Panigirtzoglou have approached the recent rise in decentralized finance (DeFi) and non-fungible tokens (NFTs) cautiously.
Their report highlights the tentative recovery in these sectors and suggests potential optimism. However, analysts emphasized the need for a cautious outlook, citing subtle factors influencing market changes.
DeFi and NFT Recovery Signals
In a recent report, JPMorgan analysts expressed a tempered view on the nascent recovery observed in DeFi and NFTs, but refrained from premature optimism.
The report notes that after a nearly two-year slump, there has been a notable resurgence in NFT sales and an increase in total value locked in DeFi. Despite these positive signs, analysts stress that these are early signs of a recovery and should be approached with caution.
DeFi’s recovery is due to a natural increase in overall cryptocurrency trading activity, with decentralized exchanges (DEXs) playing a role. Additionally, the increase in liquid staking, especially from the beginning of 2023, led by Lido, was a contributing factor. This cautious stance stems from issues that hinder Ethereum’s performance despite its central role in DeFi and NFTs, including high fees and low transaction speeds.
Emergence of new chains due to Ethereum stagnation
The report acknowledges the emergence of new blockchains and platforms such as Aptos, Sui, Sei, Celestia, and Blur, which are considered encouraging for the industry. However, Ethereum’s poor performance compared to other cryptocurrencies affects the total value locked as measured in Ethereum. Analysts recognize the upcoming Ethereum upgrade as a potential solution to its scalability issues, but remain cautious, citing uncertainty about the timing and effectiveness of such an upgrade.
In conclusion, JPMorgan analysts offer a nuanced view of the recent DeFi and NFT recovery, urging a cautious approach amid positive signs and potential challenges. The technical tone emphasizes the need for a comprehensive understanding of market dynamics and the evolving landscape of decentralized finance and non-fungible tokens.