JPMorgan says Ethereum and altcoins may continue lagging Bitcoin without stronger network activity growth.
Crypto News
JPMorgan says Ethereum (ETH) and the broader altcoin market are unlikely to close the gap with Bitcoin (BTC) without concrete improvements in network activity and real-world use cases. The bank published that view in a report last week. Analysts led by Nikolaos Panigirtzoglou said the underperformance reflects structural issues rather than short-term sentiment shifts.
The divergence is most visible in exchange-traded fund (ETF) flows. Spot BTC ETFs have recovered roughly two-thirds of outflows recorded since the October 2025 deleveraging event. Spot ETH ETFs have recovered only about one-third over the same period. JPMorgan said that gap reflects weaker institutional demand for Ethereum relative to BTC.
Momentum traders, including commodity trading advisors (CTAs) and crypto quant funds, remain slightly underweight both BTC and ETH. The bank said that indicates speculative investors have not rebuilt meaningful long positions in either asset. ETH has trailed BTC in both price performance and fund flows since the October 2025 deleveraging, the report noted.
Past ETH Upgrades Failed To Lift On-Chain Activity
Crypto prices have stabilized somewhat since a period of geopolitical tensions. BTC and ETH at times outperformed equities and other risk assets during that period. Investors were drawn partly by round-the-clock liquidity and signs of renewed institutional interest. Volatility remained elevated throughout.
Ethereum has two major upgrades scheduled for 2026, named Glamsterdam and Hegota. Both are designed to improve scalability and reduce transaction costs. JPMorgan's analysts cautioned that previous upgrades did not result in stronger on-chain activity. Earlier upgrades lowered layer-2 fees and reduced network congestion but also weakened the token burn mechanism. That change increased net ETH supply and removed a source of price support.
Other #altcoins have also trailed BTC since 2023. JPMorgan cited tighter liquidity, weaker market depth and limited growth in #DeFi as persistent headwinds. Repeated hacks and security breaches across decentralized applications and trading platforms have further eroded investor confidence.
The bank said those exploits have drained liquidity from the broader altcoin market and slowed institutional adoption. Each high-profile security incident raises fresh questions about the reliability of blockchain infrastructure, particularly for smaller tokens and decentralized applications. JPMorgan did not provide price targets or a timeline for when market conditions might shift.
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