JPMorgan says ether and the wider altcoin market are likely to remain behind bitcoin unless there is a meaningful pickup in network activity, stronger DeFi adoption and clearer real-world use cases.
In a report released last week, the bank noted that ether and other altcoins have struggled to break a multi-year pattern of underperformance versus bitcoin. Weak onchain engagement, slow growth in decentralized finance and limited practical adoption continue to weigh on investor interest.
Crypto markets have faced a challenging environment over the past six months, pressured by higher interest rates, persistent inflation concerns and a broader decline in risk appetite. Earlier this year, both bitcoin and ether experienced sharp drawdowns alongside significant ETF outflows and widespread deleveraging across the sector.
“Ether and altcoins have continued to lag bitcoin despite the market’s recovery following the Iran conflict,” analysts led by Nikolaos Panigirtzoglou wrote.
ETF flow data highlights the divergence. Spot bitcoin ETFs have regained roughly two-thirds of previous outflows, while spot ether ETFs have recovered only about one-third, signaling comparatively weaker demand for ETH-linked products.
At the same time, momentum-driven investors such as commodity trading advisors (CTAs) and crypto quant funds remain slightly underweight both bitcoin and ether, suggesting speculative positioning has yet to fully rebuild.
Despite these headwinds, crypto markets have shown some resilience since the onset of geopolitical tensions. Around-the-clock trading and renewed signs of institutional participation have helped stabilize prices, with bitcoin and ether at times outperforming traditional risk assets, even as volatility stays elevated.
Looking ahead, upcoming Ethereum upgrades—including Glamsterdam and Hegota scheduled for 2026—aim to improve scalability and reduce transaction costs. However, JPMorgan cautioned that previous upgrades have not translated into stronger network activity.
Instead, earlier changes lowered Layer 2 costs and transaction fees, weakening Ethereum’s token burn mechanism and increasing net supply—factors that have limited price support.
Altcoins more broadly have also struggled relative to bitcoin since 2023, reflecting tighter liquidity conditions, reduced market depth and breadth, and slower DeFi expansion. Repeated hacks and security breaches have further damaged investor confidence.
High-profile exploits across DeFi protocols and trading platforms have triggered capital outflows, raised concerns over infrastructure reliability and slowed institutional adoption—particularly for altcoins and decentralized applications.
These structural challenges, JPMorgan argues, will likely keep ether and the broader altcoin market on the back foot unless fundamental network usage and real-world demand significantly improve.
