JPMorgan Ether and altcoin analysts said the token will not be able to catch up with bitcoin without a significant increase in network activity.
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- Ethereum and altcoins will continue to lag behind Bitcoin without a meaningful improvement in DeFi and real-world use cases, JPMorgan said.
- Spot Bitcoin ETFs have recovered two-thirds of recent outflows, while Ethereum ETFs have only recovered a third.
- The bank warned that the upcoming Ethereum upgrade for Glamsterdam and Hegota may not lift demand on the network on its own.
Ethereum and the broader altcoin market are unlikely to be able to reverse multi-year underperformance versus bitcoin without a meaningful rebound in network activity, DeFi adoption and real-world use cases, JPMorgan said.
The bank’s analysts, led by Managing Director Nikolaos Panigirzoglou, Argue Bitcoin continues to outperform ether across almost all institutional metrics. The note falls with Bitcoin trading near $76,760 with Ether near $2,260.
Bitcoin ETFs Lead the Recovery
JPMorgan said spot bitcoin ETFs recovered roughly two-thirds of outflows associated with the sell-off in the Iranian conflict, while spot bitcoin ETFs recovered only about a third. CME bitcoin futures position is near pre-crash levels, while ether has yet to catch up.
“The trend of poor performance that began in 2023 is unlikely to change unless we see meaningful improvements in network activity, decentralized finance, and real-world applications,” Panigirzoglou wrote.
Why Ethereum Upgrades Might Not Be Enough?
Ethereum’s upcoming upgrades to Glamsterdam and Hegota are designed to improve scalability and reduce transaction costs. JP Morgan warned that previous upgrades failed to stimulate stronger onchain activity and instead reduced layer 2 costs and main chain 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, analysts argued that technical improvements alone cannot offset lower burn unless demand grows enough to absorb the increase in supply.
Altcoin liquidity and hacks affect confidence
In addition to ether, JPMorgan said altcoins have underperformed bitcoin since 2023 due to lack of liquidity, weak market depth and breadth, slowing DeFi growth and frequent 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 cryptocurrency investment funds, maintained conservative positions on both assets following the deleveraging event in October. bank earlier Calls For institutional-led flows in 2026, they have relied on Bitcoin as the main beneficiary of regulatory progress.
The CLARITY Act has been flagged as a potential catalyst
JP Morgan pointed to regulatory clarity as the only variable that could change the dynamic. The CLARITY Act, which defines which digital assets fall under the Securities and Exchange Commission (SEC) and which are subject to the Commodity Futures Trading Commission (CFTC), received approval from the Senate Banking Committee on May 14 on a bipartisan vote of 15-9.
The bank said the passage could lead to new institutional activity around financing cryptocurrency projects, mergers and acquisitions, initial public offerings, and the adoption of traditional financial companies.
Until then, the report concludes, institutional capital will continue to lean toward Bitcoin as the cleanest overall trade in the asset class.
