JPMorgan ether and altcoin analysts say the tokens will not catch up to bitcoin without a major lift in network activity.
Summary
- JPMorgan said that ether and altcoins will always lag behind bitcoin without meaningful development in DeFi and real-world use cases.
- Bitcoin ETFs have received two-thirds of the recent outflows, while ether ETFs have received only one-third.
- The bank warned that the upcoming Ethereum developments Glamsterdam and Hegota may not raise demand for the network themselves.
JPMorgan said that ether and the broader altcoin market are unlikely to reverse the multi-year underperformance against bitcoin without a meaningful pick-up in network activity, DeFi adoption and real-world use cases.
The bank’s analysts, led by managing director Nikolaos Panigirtzoglou, argue that bitcoin continues to outperform ether in almost all institutional metrics. The note remains as bitcoin trades near $76,760 and ether near $2,260.
Bitcoin ETF is leading the recovery
Bitcoin ETFs received about two-thirds of the outflows tied to the Iran summit, while ether spot ETFs received about one-third, JPMorgan said. The position of CME futures on bitcoin remains close to pre-crash levels, while ether has not.
“And this trend of underperformance that started in 2023 is unlikely to change unless we see meaningful improvements in network performance, DeFi and real-world applications,” Panigirtzoglou wrote.
Why Ethereum development may not be enough
Future Ethereum developments Glamsterdam and Hegota are designed to improve scalability and lower transaction costs. JPMorgan warned that previous upgrades failed to drive strong onchain activity and instead reduced Layer 2 costs and main-chain costs, weakening the way ETH is burned and increasing net supply.
The bank’s previous warnings about the development of Ethereum were included in crypto.news last week, with analysts arguing that the development of the technology alone cannot eliminate the reduced heat unless the demand grows enough to find an increase in supply.
Altcoin liquidity and confidence weighted hacks
Apart from ether, JPMorgan said altcoins have underperformed bitcoin since 2023 due to tight liquidity, weak market depth and breadth, slow growth of DeFi and repeated hacks and security breaches.
“All of these factors eroded confidence in the broader altcoin ecosystem and discouraged the deployment of new currencies,” analysts said.
Aggressive investors including commodity advisors and crypto quant funds have maintained conservative positions in both assets after the October easing event. The bank’s previous call for institutional-led liquidity by 2026 had pegged bitcoin as the main beneficiary of regulatory progress.
The CLARITY Act has been flagged as a potential trigger
JPMorgan has flagged regulatory clarity as one of the most likely variables. The CLARITY Act, which defines which digital assets fall under the purview of the SEC and which fall under the purview of the CFTC, cleared the Senate Banking Committee on May 14 in a bipartisan 15-9 vote.
The bank said the passage could create new institutional activity in terms of crypto venture funding, M&A, IPOs and acquisitions by traditional financial firms.
Until then, the report concludes that institutional money will continue to look to bitcoin as a major clean trade in the asset class.
