JPMorgan, one of the world’s leading banks, has told its clients that ETH is losing ground to rival cryptocurrencies such as Solana (SOL) in the non-fungible token (NFT) market.
According to a report from the bank, ETH has been suffering from an age-old problem which is high transaction fees on the network.
“It appears that, similar to DeFi applications, congestion and high GAS rates have induced NFT applications to use other blockchains,” JPMorgan said.
ETH losing space
The global investment bank sent a note to clients last week explaining why it believes ETH is losing ground to SOL.
In the letter, analysts led by Nikolaos Panigirtzoglou detailed that high GAS rates and congestion drove NFT applications away from the ETH network.
Furthermore, they noted that the share of ETH’s NFT volume has dropped from 95% in early 2021 to around 80%.
While other blockchains rival ETH, JPMorgan’s global markets team found that the Solana network, in particular, has been gaining market share in recent weeks.
In this regard, analysts have warned that if the trend continues, it could affect the price of ETH.
“If the loss of its stake in NFTs starts to look more sustained in 2022, this will become a bigger issue for the valuation of ETH,” the bank said.
While the bank has not commented on other blockchains besides Solana, it is certain that ETH has lost a lot of ground to Binance Smart Chain (BSC), which has become the second largest blockchain for smart contracts on the market.
But in Solana’s case, JPMorgan isn’t only one big investment bank that sees growing potential. After all, Bank of America said last week that Solana could take market share from ETH and become the Visa of the digital asset ecosystem.