JPMorgan Ether and altcoin analysts said the tokens would not catch bitcoin without a major increase in network activity.
Summary
- JPMorgan said ether and altcoins will continue to lag behind bitcoin without significant improvement in DeFi and real-world use cases.
- Bitcoin spot ETFs have recouped two-thirds of recent outflows, while ether ETFs have only recouped a third.
- The bank warned that Ethereum’s upcoming upgrades, Glamsterdam and Hegota, may not increase network demand on their own.
JPMorgan said ether and the broader altcoin market are unlikely to reverse a years-long underperformance versus bitcoin without a significant recovery in network activity, DeFi adoption and real-world use cases.
The bank’s analysts, led by chief executive Nikolaos Panigirtzoglou, have argued that bitcoin continues to outperform ether in almost all institutional metrics. The note lands as bitcoin trades near $76,760 and ether near $2,260.
Bitcoin ETFs Lead the Recovery
Bitcoin spot ETFs have recovered about two-thirds of the outflows related to the Iranian conflict liquidation, while ether spot ETFs have only recovered about a third, JPMorgan said. CME Bitcoin futures positioning is near pre-crash levels, while ether has yet to catch up.
“And this trend of underperformance that started in 2023 is unlikely to change unless we see significant improvements in network activity, DeFi, and real-world applications,” Panigirtzoglou wrote.
Why Ethereum Upgrades Might Not Be Enough
Ethereum’s upcoming upgrades, Glamsterdam and Hegota, are designed to improve scalability and reduce transaction costs. JPMorgan warned that previous upgrades failed to strengthen on-chain activity and instead reduced Layer 2 costs and mainchain fees, weakening the ETH burn mechanism and increasing net supply.
The bank’s previous warnings about Ethereum upgrades were covered on crypto.news last week, with analysts saying that technical improvements alone cannot offset the reduction in consumption unless demand increases enough to absorb the increase in supply.
Altcoin liquidity and hacks weigh on trust
Beyond ether, JPMorgan said altcoins have underperformed bitcoin since 2023 due to tighter liquidity, lower market depth and breadth, slower growth of DeFi, and repeated hacks and security breaches.
“All of these factors have eroded confidence in the broader altcoin ecosystem and discouraged the deployment of new capital,” the analysts said.
Momentum investors, including commodity trading advisors and quantitative crypto funds, maintained cautious positions in both assets following the October deleveraging event. The bank’s previous call for capital inflows from institutions in 2026 relied on bitcoin as the main beneficiary of regulatory progress.
CLARITY Act flagged as potential catalyst
JPMorgan flagged regulatory clarity as the only variable likely to change dynamics. The CLARITY Act, which defines which digital assets fall under the SEC and which fall under the CFTC, approved the Senate Banking Committee on May 14 by a bipartisan vote of 15-9.
The bank said the adoption could trigger new institutional activity around crypto venture funding, mergers and acquisitions, IPOs and adoption by traditional financial companies.
Until then, the report concludes, institutional capital will continue to gravitate toward bitcoin as the cleanest macroeconomic transaction in the asset class.
