JPMorgan believes ether and the broader altcoin market will continue to lag bitcoin unless there is a meaningful improvement in network usage, DeFi growth and real-world adoption.
In a report published last week, the bank said the underperformance of ETH and other altcoins relative to bitcoin is unlikely to reverse without stronger onchain activity and clearer utility. Weak engagement across decentralized applications and limited adoption beyond trading remain key headwinds for investor demand.
The crypto market has faced sustained pressure over the past six months, as higher interest rates, sticky inflation and reduced risk appetite weighed on digital assets. Both bitcoin and ether experienced sharp declines earlier this year, accompanied by significant ETF outflows and widespread deleveraging.
According to analysts led by Nikolaos Panigirtzoglou, ether and altcoins have continued to trail bitcoin even during the recent market recovery following the Iran conflict.
ETF flow trends underscore the divergence. Spot bitcoin ETFs have recovered roughly two-thirds of their earlier outflows, while ether-linked ETFs have regained only about one-third, signaling weaker institutional demand for ETH.
At the same time, momentum-driven investors such as CTAs and crypto quant funds remain slightly underexposed to both bitcoin and ether, indicating that speculative positioning has yet to fully return.
Despite these challenges, crypto markets have shown signs of stabilization amid geopolitical tensions, supported by continuous trading access and renewed institutional interest. Bitcoin and ether have occasionally outperformed traditional assets during this period, even as volatility remains elevated.
Looking ahead, upcoming Ethereum upgrades—including Glamsterdam and Hegota, expected in 2026—aim to enhance scalability and reduce costs. However, JPMorgan cautioned that previous upgrades have not led to a sustained increase in network activity.
Instead, earlier improvements lowered Layer 2 fees and transaction costs, weakening Ethereum’s token burn mechanism and increasing net supply, which has limited upward price pressure.
Altcoins have broadly underperformed bitcoin since 2023, reflecting tighter liquidity, reduced market depth and slower DeFi expansion. In addition, recurring hacks and security breaches have continued to erode confidence among investors.
High-profile exploits across DeFi platforms and trading infrastructure have triggered capital outflows, raised concerns about system reliability and slowed institutional adoption—particularly for altcoins and decentralized ecosystems.
JPMorgan concludes that without a meaningful boost in network activity and real-world demand, ether and the broader altcoin market are likely to remain at a disadvantage relative to bitcoin.
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