Analysts at JPMorgan have stated that ether and altcoins are unlikely to narrow the gap with bitcoin without a noticeable uptick in network activity.

Summary

  • JPMorgan highlighted that ether and other altcoins will persist in trailing bitcoin unless there are significant developments in DeFi and practical applications.
  • Bitcoin spot ETFs have recovered approximately two-thirds of recent selloff outflows, while ether ETFs have managed to regain only about one-third.
  • The bank cautioned that the upcoming Ethereum upgrades, Glamsterdam and Hegota, may not alone enhance network demand.

According to JPMorgan, ether and the broader altcoin market are unlikely to recover from a prolonged period of underperformance in comparison to bitcoin unless there is a marked increase in network activity, DeFi participation, and real-world applicability.

The analysts, headed by managing director Nikolaos Panigirtzoglou, pointed out that bitcoin continues to outperform ether in nearly all institutional metrics. This comes as bitcoin is trading near $76,760, while ether sits around $2,260.

Bitcoin ETFs lead the recovery

Bitcoin spot ETFs have rebounded about two-thirds of the outflows caused by the recent selloff associated with the Iran conflict, whereas ether spot ETFs have only recuperated roughly one-third, according to JPMorgan. CME futures positioning for bitcoin is almost back to pre-crash levels, while ether remains lagging.

“The trend of underperformance that began in 2023 is unlikely to shift unless we see substantial improvements in network activity, DeFi, and real-world applications,” Panigirtzoglou stated.

Limitations of Ethereum upgrades

The upcoming Ethereum upgrades, Glamsterdam and Hegota, are designed to improve scalability and reduce transaction fees. However, JPMorgan has warned that prior upgrades have not led to increased on-chain activity; instead, they lowered Layer 2 costs and fees on the primary chain, undermining the ETH burn mechanism and elevating net supply.

Recent warnings from the bank about Ethereum upgrades were highlighted last week on crypto.news, where analysts indicated that technical improvements alone cannot offset reduced burning unless demand significantly rises to absorb the added supply.

Altcoin liquidity and security issues lower confidence

Beyond ether, JPMorgan noted that altcoins have been trailing bitcoin since 2023 due to tighter liquidity, reduced market depth and breadth, slow growth in DeFi, and ongoing hacks and security breaches.

“These elements have diminished confidence in the broader altcoin ecosystem and discouraged new capital from entering,” the analysts remarked.

Momentum investors, including commodity trading advisors and crypto quant funds, have taken cautious stances on both assets following the deleveraging events of October. The bank’s earlier prediction for institutional inflows in 2026 focused primarily on bitcoin as the main beneficiary of regulatory improvements.

CLARITY Act viewed as a possible catalyst

JPMorgan identified regulatory clarity as a potential transformative factor. The CLARITY Act, which aims to clarify the classification of digital assets under the SEC and CFTC, successfully passed the Senate Banking Committee with a bipartisan 15-9 vote on May 14.

The bank outlined that the act’s passage could spur fresh institutional activity in crypto venture funding, mergers and acquisitions, IPOs, and adoption by traditional financial entities.

Until such developments materialize, the report concludes that institutional capital is likely to favor bitcoin as the most attractive macro trade within the asset class.