JPMorgan: Ether Needs Increased Activity to Rival Bitcoin
Analysts at JPMorgan have highlighted that ether and altcoins are unlikely to match bitcoin’s performance without a significant uptick in network usage.
Summary
- JPMorgan has noted that ether and altcoins will continue to lag behind bitcoin unless there are considerable advancements in DeFi and practical applications.
- Bitcoin spot ETFs have recovered approximately two-thirds of the recent outflows, while ether ETFs have only managed to regain about one-third.
- The bank cautioned that the forthcoming Ethereum upgrades, Glamsterdam and Hegota, may not significantly enhance network demand.
According to JPMorgan, the ether and altcoin markets are unlikely to recover from their extended underperformance relative to bitcoin without a significant boost in network activity, DeFi participation, and practical use cases.
The bank’s analysts, led by managing director Nikolaos Panigirtzoglou, underscored that bitcoin continues to outperform ether across nearly all institutional metrics. This commentary comes as bitcoin is trading at approximately $76,760, while ether is around $2,260.
Bitcoin ETFs fuel recovery
Bitcoin spot ETFs have rebounded about two-thirds of the outflows prompted by the selloff related to the Iran situation, whereas ether spot ETFs have only recouped around one-third, according to JPMorgan. CME futures positions for bitcoin are nearly back to levels seen before the crash, while ether has not yet aligned.
“The trend of underperformance that began in 2023 is unlikely to change unless we see substantial improvements in network activity, DeFi, and real-world applications,” Panigirtzoglou remarked.
Potential limitations of Ethereum upgrades
The upcoming Ethereum upgrades, Glamsterdam and Hegota, seek to improve scalability and lower transaction costs. However, JPMorgan expressed caution, noting that past upgrades haven’t resulted in increased on-chain activity; instead, they reduced Layer 2 costs and primary-chain fees, which undermined the ETH burn mechanism and increased net supply.
Previous alerts from the bank regarding Ethereum upgrades were revisited last week on crypto.news, where analysts maintained that technical improvements alone cannot offset reduced burning unless demand rises significantly to absorb the increased supply.
Altcoin liquidity and security issues weaken confidence
Beyond ether, JPMorgan pointed out that altcoins have trailed behind bitcoin since 2023 due to tighter liquidity, limited market depth and breadth, slow growth in DeFi, and ongoing hacks and security concerns.
“These issues have eroded confidence in the broader altcoin ecosystem and deterred new capital from entering,” the analysts noted.
Momentum investors, including commodity trading advisors and crypto quant funds, have taken cautious stances on both assets following the deleveraging event in October. The bank’s previous forecast for institutional inflows in 2026 was focused on bitcoin as the primary beneficiary of regulatory advances.
CLARITY Act recognized as a possible catalyst
JPMorgan has highlighted regulatory clarity as a potential transformative factor. The CLARITY Act, which clarifies the classification of digital assets under the SEC and CFTC, successfully passed the Senate Banking Committee with a bipartisan 15-9 vote on May 14.
The bank has indicated that its passage could spark new institutional activity in areas such as crypto venture capital, mergers and acquisitions, IPOs, and adoption by traditional financial institutions.
Until such developments occur, the report concludes that institutional capital is likely to remain focused on bitcoin as the most favorable macro trade within the asset class.