Ether has continued to trail behind Bitcoin during the latest crypto market recovery, with analysts at JPMorgan Chase & Co. saying weaker network activity and declining confidence in altcoins have kept institutional investors more focused on Bitcoin.
According to a report led by Nikolaos Panigirtzoglou, Bitcoin recovered much faster than Ethereum after the recent market volatility linked to the Iran conflict. The bank said institutional investors quickly rebuilt their Bitcoin exposure through both spot exchange-traded funds and CME futures markets, while demand for Ether remained weaker.
JPMorgan noted that spot Bitcoin ETFs have already recovered nearly two-thirds of the outflows seen during the market selloff. In comparison, spot Ether ETFs have regained only around one-third of earlier withdrawals, showing weaker investor appetite for Ethereum even as the market rebounded.
The bank also pointed to CME futures data, which showed institutional traders had almost fully restored previous Bitcoin positions. Ether exposure on CME, however, remains well below earlier levels.
At the same time, JPMorgan said momentum-driven investors, including commodity trading advisors and crypto quant funds, still appear slightly underweight on both Bitcoin and Ether following the deleveraging event seen last October.
Attention is now turning toward Ethereum’s future network upgrades and whether they can help revive activity on the blockchain.
JPMorgan said Ethereum’s major upgrades over the past three years have failed to generate strong growth in network usage. Instead, the changes mainly lowered transaction fees on Layer 2 networks, reducing the amount of fee revenue earned on Ethereum’s main blockchain.
The analysts added that lower fees have weakened Ethereum’s token burn mechanism, which had previously helped reduce supply. As a result, Ether’s net supply has been growing faster, removing one of the key long-term support factors for the token’s price.
Upcoming Ethereum upgrades known as Glamsterdam and Hegota are expected to improve scalability by increasing transaction throughput and lowering costs on the base layer. However, JPMorgan questioned whether cheaper transactions alone would be enough to create lasting growth in demand across the network.
The bank said it remains uncertain whether these upgrades can generate enough new activity to offset the ongoing decline in token burns and the resulting increase in Ether supply.
Beyond Ethereum, JPMorgan said altcoins in general have struggled against Bitcoin since 2023 as liquidity conditions weakened across the crypto market. The bank pointed to lower market depth, slowing decentralized finance activity, and repeated security breaches as major reasons why investors have become more cautious toward altcoins.
According to the report, repeated hacks and operational failures across crypto platforms have also discouraged new capital from entering the altcoin market, while Bitcoin continues benefiting from its position as the most established digital asset among institutional investors.
