JPMorgan analysts believe Ethereum and the broader altcoin market may continue underperforming Bitcoin unless crypto networks see a major increase in real-world usage, DeFi activity, and on-chain demand.
According to analysts led by Nikolaos Panigirtzoglou, Bitcoin continues to dominate institutional interest while Ethereum and most altcoins struggle to regain momentum.
Bitcoin Continues Leading Institutional Flows
The report notes that Bitcoin spot ETFs have already recovered nearly two-thirds of the outflows triggered during the recent geopolitical market selloff. In comparison, Ethereum spot ETFs have only recovered about one-third of those losses.
JPMorgan also pointed out that Bitcoin futures positioning on CME has largely returned to pre-selloff levels, while Ethereum continues lagging behind.
This divergence reinforces Bitcoin’s growing position as the preferred institutional crypto asset during uncertain market conditions.
Ethereum Upgrades May Not Be Enough
JPMorgan warned that upcoming Ethereum upgrades — including Glamsterdam and Hegota — may improve scalability and lower transaction costs, but technical improvements alone may not solve Ethereum’s larger demand problem.
The bank argued that previous upgrades:
- Reduced Layer 2 transaction costs
- Lowered main-chain fees
- Weakened Ethereum’s token burn mechanism
- Increased ETH supply pressure
Without stronger network demand and broader adoption, the analysts believe these upgrades may have limited impact on ETH’s long-term performance.
Altcoins Continue Facing Confidence Problems
Beyond Ethereum, JPMorgan said the broader altcoin market has struggled since 2023 due to several ongoing challenges:
- Weak liquidity
- Reduced market depth
- Slower DeFi growth
- Repeated hacks and security breaches
- Lower institutional confidence
The bank believes these issues have discouraged fresh capital from entering the altcoin ecosystem.
Institutional Investors Still Favor Bitcoin
According to the report, many professional trading firms and quantitative funds remain cautious across the crypto market following last year’s major deleveraging events.
JPMorgan says institutional capital continues gravitating toward Bitcoin because it is viewed as:
- The cleanest macro crypto trade
- The most regulated digital asset
- The strongest institutional store-of-value play
CLARITY Act Could Become a Major Catalyst
One potential shift highlighted by JPMorgan is regulatory clarity in the United States.
The bank pointed to the advancing CLARITY Act, which aims to define regulatory oversight between the SEC and CFTC for digital assets.
If passed, analysts believe the legislation could:
- Increase institutional participation
- Boost crypto venture funding
- Accelerate mergers and acquisitions
- Support public listings and broader adoption
Until then, JPMorgan expects Bitcoin to remain the dominant institutional choice while Ethereum and altcoins continue searching for stronger real-world demand and sustainable network growth.
