JPMorgan's Nikolaos Panigirtzoglou has doubled down on his bearish Ethereum call in his recent research note, claiming that its waning dominance in the non-fungible token sector could negatively affect the price of the Ether (ETH) token.
ETH is down 35.55% from its November peak of $4,878.
The analyst has noted that the blockchain's dominance in the NFT market has slipped to 80%.
While Ethereum continues to enjoy a commanding lead, it is being challenged by rival Solana.
If Ethereum keeps ceding ground to rivals, Panigirtzoglou predicts that it will not bode well for the cryptocurrency's valuation:
If the loss of its NFT share starts looking more sustained in 2022, that would become a bigger problem for Ethereum's valuation.
In the meantime, NFT marketplace OpenSea recently reached a valuation of $13.3 billion.
In December, $2.7 billion worth of NFT sales were recorded across different blockchains, with Ethereum accounting for the lion's share of them ($2.3 billion).
Too late to scale?
Naysayers believe that Ethereum will not be able to retain its dominance because it has become too expensive to use for the average Joe due to increased network congestion.
During his recent appearance on the Bankless podcast, co-founder Vitalik Buterin said that the second-largest blockchain was halfway to achieving full optimization. Fraught with delays, Ethereum 2.0 has now been pushed back to mid-2022. The Beacon chain, which went live in December 2020, is expected to merge with the mainnet before June. Sharding, which is required to achieve a substantial level of scalability, is only expected to ship in early 2023.
Panigirtzoglou believes that Ether might not scale fast enough in order to retain its dominance in such fast-growing market sectors as decentralized finance and NFTs.