Analysts at JPMorgan Chase say Ethereum and other altcoins are unlikely to catch up with Bitcoin unless there is a major increase in network activity, DeFi growth, and real-world blockchain use cases.
The report, led by JPMorgan managing director Nikolaos Panigirtzoglou, said Bitcoin continues to outperform Ethereum across most institutional investment indicators. At the time of the report, Bitcoin was trading near $76,760, while Ether traded around $2,260.
According to JPMorgan, spot Bitcoin ETFs have already recovered around two-thirds of the outflows linked to the recent market selloff caused by tensions involving Iran. In comparison, Ether spot ETFs recovered only about one-third of their previous losses.
The analysts also noted that Bitcoin futures positioning on the Chicago Mercantile Exchange has nearly returned to levels seen before the recent market downturn, while Ethereum futures activity remains weaker.
JPMorgan said Ethereum’s underperformance against Bitcoin, which began in 2023, is unlikely to change without stronger blockchain activity and broader adoption of decentralized finance and real-world applications.
The bank also discussed Ethereum’s upcoming Glamsterdam and Hegota upgrades, which are designed to improve scalability and lower transaction costs. However, JPMorgan warned that earlier upgrades failed to generate significant growth in on-chain activity. Instead, lower transaction fees reduced Ethereum’s token-burning mechanism, increasing overall ETH supply.
Beyond Ethereum, the bank said the broader altcoin market has struggled because of weaker liquidity, lower market depth, slower DeFi expansion, and repeated security breaches and hacks across the crypto sector. Analysts said these issues have reduced investor confidence and discouraged fresh capital from entering altcoins.
JPMorgan added that institutional investors, including quantitative crypto funds and commodity trading advisers, remain cautious after the major deleveraging event seen in October.
The bank believes one possible positive catalyst could come from clearer crypto regulation in the United States. Analysts pointed to the proposed CLARITY Act, which would define whether digital assets fall under the authority of the Securities and Exchange Commission or the Commodity Futures Trading Commission.
The bill recently passed the Senate Banking Committee with bipartisan support. JPMorgan said clearer regulation could encourage more institutional investment, mergers, acquisitions, IPO activity, and broader adoption of crypto products by traditional financial companies.
Until then, the bank expects institutional investors to continue favoring Bitcoin as the strongest and most stable large-scale crypto investment.
