BTC Price Index and Live Chart – CoinDesk”>(BTC) exchange-traded fund (ETF) improved sentiment in crypto markets, JPMorgan (JPM) said in a research report Thursday.

The report stated that this increase comes after almost two years of downward trending. “This gives us some hope that we may be able to move forward in the medium-term trajectory of DeFi/NFT activities.”

While we don’t doubt that this recent revival of DeFi/NFT is a good sign, we think it is still too early to get excited about it,” wrote a team of analysts led by Nikolaos Pantigirtzoglou.

DeFi is a term that refers to lending, trading, and other financial transactions carried out on blockchains. NFTs represent virtual or physical assets and can be traded or sold on a Blockchain.

JPMorgan expects a recovery in DeFi due to the increased trading activity. Some of this is done on decentralized exchanges. Liquid Staking, by LIDO, is also partially responsible.

ETH Price Index and Live Chart – CoinDesk”>(ETH) has underperformed other cryptocurrencies, so measuring total value locked (TVL) in ETH terms would mechanically show some improvement, as these other digital assets have gained more in recent months, the authors wrote.

The bank also praised the rise in recent years of new DeFi chains and protocols, such as Aptos and SUI. The NFTs also benefitted from the rise of Bitcoin ordinals.

The report stated that the Ethereum blockchain did not seem to benefit from this recent revival of DeFi and NFT activities. It also faces challenges related to “network scalability,” low transaction speeds, higher fees, and increased competition with other layers-1 chains.

Read more: Grayscale Bitcoin Trust could see $2.7B in outflows if the ETF conversion is approved: JPMorgan

Sheldon Reback is the editor.