JPMorgan: Ether Needs Increased Activity to Rival Bitcoin
Analysts at JPMorgan suggest that ether and other altcoins are unlikely to match bitcoin’s performance without a substantial uptick in network activity.
Summary
- JPMorgan has stated that ether and altcoins are expected to trail behind bitcoin unless there are significant advancements in DeFi and practical applications.
- Bitcoin spot ETFs have recovered roughly two-thirds of recent outflows, while ether ETFs have only managed to recover about one-third.
- The bank cautioned that the upcoming Ethereum upgrades, Glamsterdam and Hegota, might not elevate network demand on their own.
According to JPMorgan, ether and the broader altcoin market are unlikely to recover from a sustained underperformance against bitcoin without a considerable rise in network activity, engagement in DeFi, and real-world usage cases.
Led by managing director Nikolaos Panigirtzoglou, the bank’s analysts highlighted that bitcoin consistently outperforms ether in nearly every institutional metric. This commentary aligns with bitcoin trading near $76,760 and ether at approximately $2,260.
Bitcoin ETFs fuel recovery
Bitcoin spot ETFs have rebounded by about two-thirds of the outflows triggered by the selloff associated with the Iran conflict, whereas ether spot ETFs have only regained around one-third, according to JPMorgan. CME futures positioning for bitcoin is close to pre-crash levels, while ether still lags behind.
“This pattern of underperformance observed since 2023 is unlikely to change unless we see significant improvements in network activity, DeFi, and real-world applications,” noted Panigirtzoglou.
Reasons Ethereum upgrades may fall short
The upcoming Ethereum upgrades, Glamsterdam and Hegota, are designed to improve scalability and lower transaction costs. However, JPMorgan warned that previous upgrades did not result in increased on-chain activity; rather, they reduced Layer 2 costs and primary-chain fees, which weakened the ETH burn mechanism and increased net supply.
Past warnings from the bank regarding Ethereum upgrades were echoed last week on crypto.news, where analysts contended that technical improvements alone cannot offset reduced burning unless demand sufficiently rises to accommodate the added supply.
Liquidity issues and hacks undermine altcoin confidence
Aside from ether, JPMorgan noted that altcoins have underperformed since 2023 due to tighter liquidity, reduced market depth and breadth, slow growth in DeFi, and frequent hacks and security incidents.
“These elements have eroded trust in the wider altcoin ecosystem and discouraged the influx of new capital,” analysts remarked.
Momentum investors, including commodity trading advisors and crypto quant funds, have adopted cautious stances on both assets following the deleveraging event in October. The bank previously forecasted institutional inflows for 2026 primarily benefiting bitcoin from regulatory advancements.
CLARITY Act seen as a potential catalyst
JPMorgan highlighted the significance of regulatory clarity as a possible turning point. The CLARITY Act, which seeks to clarify the classification of digital assets under SEC and CFTC regulations, successfully passed the Senate Banking Committee with a bipartisan vote of 15-9 on May 14.
The bank has indicated that its passage could stimulate new institutional activity in crypto venture funding, mergers and acquisitions, IPOs, and acceptance by traditional financial institutions.
Until such changes materialize, the report concludes that institutional capital will likely continue to prefer bitcoin as the most appealing macro trade within this asset class.
