JPMorgan’s crypto analysts say ether and the broader altcoin market are unlikely to close their performance gap with bitcoin without a meaningful pickup in on‑chain activity, DeFi adoption and real‑world use cases. The bank’s note, led by Nikolaos Panigirtzoglou, contrasts bitcoin’s stronger institutional metrics with ether’s lagging position as BTC trades well above ETH.
ETF flows and futures positioning
JPMorgan highlights that bitcoin spot ETFs have recovered roughly two‑thirds of the outflows tied to the Iran conflict selloff, while ether spot ETFs have only recovered about one‑third. CME futures positioning in bitcoin has returned close to pre‑crash levels; ether futures have not. That differential, the bank argues, is one reason institutional capital continues to prefer bitcoin.
Why upgrades alone may not help
Ethereum’s upcoming upgrades—named Glamsterdam and Hegota—aim to boost scalability and lower transaction costs. JPMorgan cautions, however, that past protocol improvements have not reliably translated into stronger main‑chain demand. Lower fees and reduced Layer‑2 costs can weaken ETH burning and, in some cases, increase net supply unless user demand rises enough to offset it. In short, technical upgrades alone won’t drive a durable price rotation toward ether unless they produce meaningful increases in usage.
Altcoin market headwinds
Beyond ETH, the bank points to several structural weaknesses in the altcoin space that have hampered performance since 2023: thinner liquidity, weaker market depth and breadth, slower DeFi growth, and recurring hacks and security breaches. These factors have eroded investor confidence and discouraged fresh institutional allocations. Momentum managers, CTAs and quant funds have remained cautious after October’s deleveraging events, keeping conservative exposure to both assets but favoring bitcoin.
Regulatory clarity as a potential catalyst
JPMorgan identifies regulatory clarity as the primary variable that could alter current flows. The CLARITY Act—which aims to delineate SEC versus CFTC jurisdiction over different digital assets—cleared the Senate Banking Committee 15–9. Passage could spur renewed institutional activity across venture funding, M&A, IPOs and adoption by traditional financial firms. Until such clarity arrives, the report concludes institutional capital is likely to keep tilting toward bitcoin as the cleaner macro trade within the crypto complex.
Bottom line
JPMorgan’s view is straightforward: ethereum and altcoins need more real economic activity—DeFi usage, payments, enterprise adoption—rather than just protocol tweaks to meaningfully catch bitcoin. Absent that demand, and pending regulatory developments, bitcoin remains the primary institutional beneficiary in the near term.