JPMorgan Chase: Without Stronger Network Activity, Ethereum and Altcoins Could Continue to Underperform Bitcoin

BlockBeats News, May 15th. In a latest report, JPMorgan Chase analysts pointed out that despite the overall crypto market rebound after the Iran conflict, Ethereum and other altcoins have continued to underperform Bitcoin. The analyst team, led by Managing Director Nikolaos Panigirtzoglou, stated that this trend, which began in 2023, is "unlikely to change unless we see meaningful improvements in network activity, DeFi, and real-world applications."

The analysts noted that since the conflict-induced market sell-off, Bitcoin has shown a stronger recovery in spot ETF inflows and institutional futures positions compared to Ethereum. Spot Bitcoin ETFs have regained about two-thirds of the outflows, while spot Ethereum ETFs have only regained about one-third. CME futures positioning also indicates that institutional investors are more aggressively rebuilding their Bitcoin exposure than Ethereum.

Regarding the upcoming Ethereum upgrades (Glamsterdam and Hegota), the analysts questioned whether they are sufficient to improve ETH's relative performance. The upgrades over the past three years have mainly reduced Layer 2 transaction costs, weakening Ethereum's fee generation and token burn mechanisms, accelerating net supply growth, and weakening price support. Whether the new upgrades can generate enough new demand and network activity remains to be seen.

As for altcoins, the analysts believe that since 2023, weak liquidity conditions, low market depth and breadth, limited growth in DeFi activity, and recurring hacks and security incidents have collectively eroded market confidence and hindered new capital deployment.