Ethereum’s ether and other altcoins are still lagging behind bitcoin despite a broader recovery in digital assets following recent geopolitical tensions, according to a new report from JPMorgan.
Analysts led by managing director Nikolaos Panigirtzoglou said the performance gap that opened in 2023 is unlikely to close without a clear pickup in network usage, wider adoption of decentralized finance (DeFi), and stronger real‑world use cases.
Faster rebound in bitcoin ETFs and futures
Bitcoin has staged a quicker comeback than ether in both spot exchange‑traded funds and institutional futures since the conflict‑linked selloff.
- Spot bitcoin ETFs have clawed back about two‑thirds of their previous outflows.
- Comparable ether products have recovered only around one‑third over the same period.
Futures positioning tells a similar story. JPMorgan said bitcoin futures positioning is close to pre‑selloff levels, while ether futures remain below earlier marks. As a result, institutional exposure has tilted more heavily toward bitcoin, reflecting faster re‑entry into that market than into ether.
Momentum traders still underweight
Momentum‑driven trading firms, such as commodity trading advisors and quantitative crypto funds, have not returned to prior allocation levels in either asset.
Following last October’s deleveraging phase, these groups continue to run smaller positions in both bitcoin and ether and remain slightly underweight versus their historical averages, the report said.
Ethereum upgrades face key adoption test
Attention is now turning to Ethereum’s planned Glamsterdam and Hegota upgrades, expected later this year. JPMorgan questioned whether they can meaningfully shift the balance between bitcoin and ether.
Over the past three years, earlier Ethereum upgrades cut transaction costs on layer 2 networks but did not generate a convincing rise in on‑chain activity. Lower usage pushed network fees down and slowed the rate at which ether is burned, weakening one of the key supports for the token’s price.
The new upgrades aim to improve scalability by raising throughput and reducing base‑layer costs. Analysts argued, however, that the critical test will be whether these improvements translate into:
- stronger overall demand, and
- higher network usage that can offset slower token burn and rising supply.
Without that, they see limited scope for ether to close the performance gap with bitcoin.
On‑chain metrics highlight ether’s challenge
JPMorgan highlighted on‑chain data as the core problem for ether. Daily Ethereum transactions are currently around 1.966 million. While this is notably higher than a year ago, it does not indicate a step‑change in demand following fee‑reducing upgrades.
This weaker activity has fed directly into supply dynamics:
- After the Pectra upgrade in May 2025, the daily ETH burn rate dropped sharply.
- Ethereum’s supply has since turned slightly inflationary, with an annual rate near 0.23%.
That stands in stark contrast to 2021, when surging network demand made ether deflationary, strengthening the case for holding the asset.
Traders are now watching for signs that upcoming upgrades can lift daily active addresses, currently about 514,000. JPMorgan noted that a sustained rise in this figure would signal genuine user growth and help absorb ongoing token issuance to validators.
May ETF flows underscore market hesitancy
The divergence in capital flows was underscored on May 13, when spot bitcoin ETFs recorded net outflows of $635.23 million, the largest single‑day withdrawal in more than three months.
Ethereum‑based funds also saw pressure around the same time, with three straight days of outflows. The simultaneous withdrawals point to broader caution among institutional participants, rather than a simple rotation between major tokens.
Altcoins trail further behind
Outside ether, the rest of the altcoin market has fared even worse relative to bitcoin since 2023. JPMorgan cited several structural headwinds:
- thin liquidity and shallow market depth,
- limited growth in DeFi participation tied to smaller projects, and
- repeated cyber incidents that have hurt confidence.
These factors have curbed fresh capital inflows and kept many alternative tokens from participating fully in the broader crypto rebound.
DeFi growth concentrated in a few names
The total value locked (TVL) in DeFi protocols has climbed above $150 billion, reaching a three‑year high and signaling renewed activity in parts of the ecosystem.
However, JPMorgan noted that this growth is concentrated in a small set of established protocols. The long tail of smaller projects has seen far less benefit, limiting support for most altcoins even as headline DeFi metrics improve.
Outlook: utility and usage remain the key
JPMorgan’s assessment suggests that price performance in the next phase of the cycle will hinge less on technical upgrades alone and more on whether those upgrades translate into real usage:
- For bitcoin, institutional positioning and ETF flows currently show a stronger recovery profile.
- For ether, the bank sees network activity, fee dynamics, and the impact of Glamsterdam and Hegota as central to any potential catch‑up.
- For broader altcoins, persistent liquidity and security issues remain major barriers to matching bitcoin’s gains.
Without a measurable rise in on‑chain activity and practical applications, the bank expects the existing performance gap between bitcoin, ether, and the wider altcoin market to remain in place.
As Bitcoin outperforms ETH, learn how to navigate this shifting market with our guide: Bitcoin trading strategies.
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