JPMorgan: Ether Needs to Increase Activity to Rival Bitcoin
Analysts at JPMorgan suggest that ether and altcoins are unlikely to catch up to bitcoin without a considerable rise in network activity.
Summary
- JPMorgan noted that ether and altcoins will persist in trailing bitcoin unless there are significant improvements in DeFi and real-world implementation.
- Bitcoin spot ETFs have recovered approximately two-thirds of recent outflows, while ether ETFs have managed to regain just about one-third.
- The bank cautioned that the upcoming Ethereum upgrades, Glamsterdam and Hegota, may not individually enhance network demand.
Per JPMorgan’s analysis, ether and the broader altcoin market are unlikely to recover from a long period of underperformance compared to bitcoin unless there is a significant boost in network activity, DeFi involvement, and practical utilization.
The analysts, led by managing director Nikolaos Panigirtzoglou, underscored that bitcoin continues to outperform ether across almost all institutional metrics. This assessment arrives as bitcoin trades around $76,760, with ether priced at approximately $2,260.
Bitcoin ETFs fuel recovery
According to JPMorgan, bitcoin spot ETFs have rebounded by about two-thirds following the outflows due to the Iran situation, whereas ether spot ETFs have only recovered about a third. CME futures positioning for bitcoin is nearly back to levels seen prior to the crash, while ether has yet to match this progress.
“The trend of underperformance observed since 2023 is unlikely to alter unless we witness substantial advancements in network activity, DeFi, and real-world applications,” Panigirtzoglou stated.
Potential limitations of Ethereum upgrades
The upcoming Ethereum upgrades, Glamsterdam and Hegota, are intended to improve scalability and decrease transaction costs. However, JPMorgan warned that past upgrades failed to drive higher on-chain activity; instead, they reduced Layer 2 expenses and primary-chain fees, undermining the ETH burn mechanism and raising net supply.
Earlier alerts from the bank about Ethereum upgrades were emphasized last week in crypto.news, where analysts contended that mere technical improvements cannot offset reduced burning unless demand increases sufficiently to absorb the additional supply.
Altcoin liquidity and security breaches shake confidence
In addition to ether, JPMorgan highlighted that altcoins have been trailing bitcoin since 2023 due to tighter liquidity, reduced market depth and breadth, sluggish growth in DeFi, and recurring hacks and security vulnerabilities.
“These issues have undermined confidence in the broader altcoin landscape and deterred new capital investments,” the analysts observed.
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 predicted that institutional inflows in 2026 would primarily benefit bitcoin due to regulatory improvements.
CLARITY Act seen as a possible catalyst
JPMorgan highlighted regulatory clarity as a potential game-changer. The CLARITY Act, which aims to clarify 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 suggested that its passage could trigger new institutional engagement in crypto venture funding, mergers and acquisitions, IPOs, and adoption by traditional financial institutions.
Until such developments take place, the report concludes that institutional capital will continue to favor bitcoin as the most promising trade in the asset class.