In a research note that has sent shockwaves through the altcoin community, JPMorgan analysts led by Managing Director Nikolaos Panigirtzoglou warn that Ethereum and the broader altcoin market will likely continue underperforming Bitcoin unless there are concrete and measurable gains in network usage .
The team stated that the underperformance trend that began in 2023 "is unlikely to change unless we see meaningful improvements in network activity, DeFi, and real-world applications" . This is not a short-term prediction but rather a structural assessment of how these assets are positioned relative to Bitcoin in the current macroeconomic environment.
THE DATA THAT BACKS IT UP: The divergence in recovery between Bitcoin and Ethereum ETFs tells a stark story that is hard to ignore. Spot Bitcoin exchange-traded fund flows have recovered roughly two-thirds of previous outflows since the market decline triggered by the Iran conflict, while spot ETH ETFs have recaptured only about one-third over the same period . CME futures data showed a similar divergence, with institutional Bitcoin exposure nearly fully restored while ETH futures remain below prior levels . Momentum-driven traders, including commodity trading advisors and crypto quant funds, remain "slightly underweight" both assets, with JPMorgan analysts linking that positioning to a broad deleveraging event in October 2025 that has not fully reversed .
WHY ETHEREUM IS STRUGGLING: The report took direct aim at Ethereum's upcoming Glamsterdam and Hegota upgrades, which are designed to increase base-layer throughput and lower transaction costs . The analysts noted that three years of prior upgrades had not meaningfully grown network activity, and those earlier changes primarily reduced layer-2 fees which actually compressed revenue generated on the base layer, weakened the token burn mechanism, and contributed to net ETH supply growth . In other words, Ethereum's upgrades have been working against its own price by making the network too efficient at processing transactions cheaply, thereby reducing the amount of ETH burned and increasing the circulating supply. The analysts said it remains unclear whether the new upgrades can generate enough demand to offset the continued reduction in Ethereum's burn rate .
THE ALTCOIN PROBLEM: For altcoins broadly, the picture is even grimmer. JPMorgan analysts pointed to thinner liquidity, lower market depth, limited DeFi expansion, and repeated security incidents as factors that have collectively weighed on investor confidence . "All these factors have eroded confidence in the broader altcoin ecosystem and discouraged the deployment of fresh capital," the analysts said . This suggests that even if the overall crypto market recovers, the money may flow primarily into Bitcoin rather than spreading evenly across all coins as it did in previous cycles.