Ether and altcoin analysts at JPMorgan said the token will not overtake Bitcoin unless network activity increases significantly.
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JPMorgan said that without meaningful improvements in DeFi and real-world use cases, Ether and altcoins will continue to lag behind Bitcoin. The Bitcoin Spot ETF has recovered two-thirds of recent outflows, while the Ether ETF has recovered only one-third. The bank warned that future Ethereum upgrades may prevent Gramsterdam and Hegota from raising network demand on their own.
JPMorgan said Ether and the broader altcoin market are unlikely to reverse years of underperformance versus Bitcoin unless there is a significant recovery in network activity, DeFi adoption, and real-world use cases.
Analysts at the bank, led by managing director Nikolaos Panigirtzoglou, argued that Bitcoin continues to outperform Ethereum in almost every institutional indicator. The note landed as Bitcoin traded near $76,760 and Ether near $2,260.
Bitcoin ETFs lead recovery
According to JPMorgan, the Bitcoin Spot ETF has recovered about two-thirds of the outflow due to the decline in the Iran conflict, while the EtherSpot ETF has recovered only about one-third. CME futures positioning in Bitcoin is close to pre-crash levels, but Ether has yet to catch up.
“And unless we see meaningful improvements in network activity, DeFi, and real-world applications, this underperformance trend that began in 2023 is unlikely to change,” Panigirtzoglou wrote.
Why upgrading Ethereum is not enough
Upcoming Ethereum upgrades, Gramsterdam and Hegota, are designed to improve scalability and reduce transaction costs. JP Morgan warned that previous upgrades failed to facilitate enhanced on-chain activity and instead reduced layer 2 costs and mainchain fees, weakening the ETH burn mechanism and increasing net supply.
The bank’s previous warnings about Ethereum upgrades were covered last week on crypto.news, with analysts arguing that technological improvements alone won’t be able to offset the decline unless demand grows enough to absorb the increase in supply.
Altcoin liquidity and hacking weigh on confidence
In addition to Ether, JPMorgan said altcoins have underperformed Bitcoin since 2023 due to tight liquidity, weak market depth and breadth, slowing DeFi growth, and repeated hacks and security breaches.
“All these factors are undermining confidence in the broader altcoin ecosystem and hindering the deployment of new capital,” the analysts said.
Momentum investors such as commodity trading advisors and crypto quantitative funds have maintained conservative positions in both assets following October’s deleveraging event. The bank had previously called for institutionally led capital inflows in 2026, but relied on Bitcoin as the main beneficiary of regulatory developments.
CLARITY Actions flagged as potential catalysts
JPMorgan noted that regulatory transparency is one variable that could change the situation. The CLARITY Act, which defines which digital assets fall under the jurisdiction of the SEC and which falls under the jurisdiction of the CFTC, passed the Senate Banking Committee on May 14 in a bipartisan 15-9 vote.
The bank said the passage could spark new institutional investor activity around funding for crypto ventures, M&A, IPOs, and hiring by traditional financial companies.
Until then, the report concludes, institutional investors will continue to lean toward Bitcoin, the cleanest macro trade in the asset class.
