According to JPMorgan’s latest analysis, Ethereum and the altcoin market in general need significant improvements in on-net transaction volume, proliferation of decentralized finance applications, and real-world usage to end its multi-year slump against Bitcoin.
The divide between Bitcoin and altcoins deepens
The cryptocurrency market has been under pressure over the past six months due to rising interest rates and inflationary pressures. Especially at the beginning of the year, while there were remarkable declines in Bitcoin and Ethereum prices, a general risk reduction trend in the sector came to the fore with the high amounts of money coming out of exchange-traded funds (ETFs).
Analysts report that a partial recovery has begun in the markets after the tension in Iran and that there is a recovery led by Bitcoin. But even during this period, Ethereum and other altcoins lagged behind Bitcoin. JPMorgan experts state that one of the reasons for this difference is clearly seen especially in ETF flows.
Spot ETF flows compared
Total assets invested in spot Bitcoin ETFs have offset nearly two-thirds of previous outflows, according to data shared by JPMorgan analysts. In comparison, spot Ethereum ETFs appear to have only recovered by a third. Additionally, short-term traders and algorithmic funds in the markets have not yet realized the expected accumulation in both Bitcoin and Ethereum.
“Ethereum and other altcoins have performed poorly relative to Bitcoin despite geopolitical tensions in Iran. This divergence in demand for ETFs is striking.”
Developments and expectations in the Ethereum network
According to experts, although the markets have been stable for a while, institutional investor interest and market liquidity, which can be traded at any time of the day, lead to sudden fluctuations in prices. Although from time to time crypto assets have performed better than traditional risk instruments such as the stock market, Bitcoin stands out in the general trend.
In the Ethereum ecosystem, scalability and reducing transaction costs are aimed with the Glamsterdam and Hegota updates, which are planned to be implemented in 2026. JPMorgan reminds us that similar updates in the past have failed to boost on-chain activity as expected.
The cost-cutting effect of previous updates made layer two networks cheaper while also weakening Ethereum’s token burning model. This shift increased the circulating supply of Ethereum and limited price support.
Trust issues continue in altcoins
The main reasons for the poor performance in altcoins since 2023 include liquidity contraction, decreased transaction depth, limited growth in decentralized finance, and ongoing cyber attacks. It is stated that these factors shook investor confidence, accelerated capital outflows and caused corporate demand to decline.
Recently, security vulnerabilities, especially in DeFi applications and various cryptocurrency platforms, continue to cause large amounts of damage. These events have reduced trust in blockchain infrastructure and raised additional concerns, especially for altcoins and decentralized applications.
