JPMorgan argues that without a meaningful ecosystem boom, ether and altcoins will continue trailing bitcoin.

JPMorgan expects ether and the wider altcoin market to keep lagging bitcoin unless there is a significant improvement in network activity, DeFi adoption and real-world utility.

In its latest report, the bank said ETH and other altcoins remain stuck in a multi-year pattern of underperformance relative to bitcoin, driven by weak onchain engagement and limited use beyond speculative trading.

The broader crypto market has been under pressure for much of the past six months, as higher interest rates, persistent inflation and a weaker risk environment weighed on digital assets. Earlier this year, both bitcoin and ether saw steep declines alongside notable ETF outflows and a wave of deleveraging.

Analysts led by Nikolaos Panigirtzoglou noted that even after a partial recovery following the Iran conflict, ether and altcoins have continued to trail bitcoin.

ETF flow trends further highlight the gap. Spot bitcoin ETFs have recovered about two-thirds of prior outflows, while ether ETFs have regained only around one-third, pointing to softer institutional demand for ETH.

At the same time, momentum-focused investors such as CTAs and crypto quant funds remain slightly underweight bitcoin and ether, suggesting that speculative positioning has yet to fully return.

Despite these headwinds, crypto markets have shown some resilience. Continuous trading access and renewed institutional interest have helped stabilize prices, with bitcoin and ether occasionally outperforming traditional assets during periods of geopolitical tension.

Looking forward, upcoming Ethereum upgrades, including Glamsterdam and Hegota in 2026, aim to enhance scalability and reduce transaction costs. However, JPMorgan warned that previous upgrades did not lead to sustained increases in network usage.

Instead, earlier changes lowered Layer 2 fees and transaction costs, weakening Ethereum’s token burn mechanism and increasing overall supply—factors that have limited price support.

Altcoins have broadly underperformed bitcoin since 2023, reflecting tighter liquidity, reduced market depth and slower DeFi growth. Ongoing security breaches and hacks have further undermined investor confidence.

High-profile exploits across DeFi platforms and trading infrastructure have led to capital outflows, raised concerns about system reliability and slowed institutional adoption, particularly within the altcoin space.

According to JPMorgan, without a meaningful rebound in network activity and real-world demand, ether and the broader altcoin market are likely to remain at a structural disadvantage compared to bitcoin.