Ethereum Under Pressure as Competing Networks Gain Ground, Says JPMorgan

Ethereum Faces Mounting Pressure as Rivals Gain Ground, JPMorgan Warns

Ethereum’s native cryptocurrency, ether (ETH), has struggled to keep pace with bitcoin (BTC) and other altcoins, as competition from rival blockchains intensifies, according to a recent JPMorgan report.

The bank pointed out that Ethereum lacks a strong market narrative compared to bitcoin, which continues to be viewed as digital gold and a hedge against inflation. Additionally, while Ethereum has undergone significant upgrades—most recently Dencun—its mainnet is seeing a decline in activity as users and developers increasingly migrate to layer-2 networks.

“Decentralized applications (dApps) are opting for more efficient, application-specific blockchains, weakening Ethereum’s transaction volume,” wrote JPMorgan analysts led by Nikolaos Panigirtzoglou. Platforms such as Uniswap, dYdX, and Hyperliquid have either announced or completed moves to alternative chains.

Uniswap’s transition to Unichain could prove especially damaging, as it is one of Ethereum’s largest gas-consuming protocols. A decline in network activity would result in reduced transaction fees and validator earnings, further pressuring Ethereum’s economic model, the report noted.

Meanwhile, competitors like Solana have surged in activity, partly due to the explosive growth of memecoins. The shift in user preference could also impact Ethereum’s tokenomics, potentially making ETH inflationary as transaction fees drop and fewer tokens are burned.

Still, Ethereum remains the dominant player in key sectors such as stablecoins, decentralized finance (DeFi), and tokenization. While institutional adoption could provide support, JPMorgan cautioned that competition from alternative blockchains will continue to pose challenges for Ethereum’s growth.