JPMorgan says ether and the broader altcoin segment are likely to remain behind bitcoin unless there is a clear acceleration in network activity, DeFi expansion and real-world usage.
In a report released last week, the bank highlighted that ETH and other altcoins have struggled to break a prolonged trend of underperformance versus bitcoin. Weak onchain engagement and limited adoption beyond speculative trading continue to dampen investor interest.
Over the past six months, crypto markets have faced persistent pressure from macroeconomic factors, including higher interest rates, inflation concerns and a softer risk environment. Both bitcoin and ether saw notable declines earlier in the year, alongside heavy ETF outflows and widespread deleveraging.
Analysts led by Nikolaos Panigirtzoglou noted that despite a partial market recovery following the Iran conflict, ether and altcoins have continued to lag behind bitcoin.
ETF flow data reinforces this gap. Spot bitcoin ETFs have recovered around two-thirds of previous outflows, while ether ETFs have clawed back only about one-third, pointing to weaker institutional demand for ETH.
Meanwhile, momentum-driven investors such as CTAs and crypto quant funds remain slightly underweight across both bitcoin and ether, indicating that speculative positioning has yet to fully rebuild.
Even so, crypto prices have shown some resilience in recent weeks. The market’s 24/7 trading structure and renewed institutional interest have helped stabilize assets, with bitcoin and ether occasionally outperforming traditional markets during periods of geopolitical stress.
Looking ahead, upcoming Ethereum upgrades such as Glamsterdam and Hegota, expected in 2026, aim to improve scalability and reduce transaction costs. However, JPMorgan cautioned that past upgrades failed to generate a sustained increase in network activity.
Instead, earlier improvements reduced Layer 2 fees and transaction costs, weakening Ethereum’s token burn mechanism and increasing overall supply—factors that have limited price support.
Altcoins more broadly have underperformed bitcoin since 2023, reflecting tighter liquidity, reduced market depth and slower DeFi growth. Repeated security breaches and hacks have also weighed heavily on sentiment.
High-profile exploits across DeFi protocols and trading platforms have triggered capital outflows, raised concerns about infrastructure reliability and slowed institutional adoption, particularly within the altcoin ecosystem.
JPMorgan concludes that without a meaningful rebound in network usage and real-world demand, ether and the broader altcoin market are likely to remain structurally disadvantaged relative to bitcoin.
