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JPMorgan says Ether and the broader altcoin market are unlikely to close the performance gap with Bitcoin unless blockchain networks show stronger real activity, not just another round of speculative trading.
Analysts led by Nikolaos Panigirtzoglou said the underperformance trend that began in 2023 is likely to persist unless Ethereum and other smart contract platforms generate more demand from DeFi, tokenized assets, payments and other blockchain applications.
Bitcoin Keeps Liquidity as Altcoin Rotation Stalls
Bitcoin has continued to pull ahead of the rest of the market, supported by stronger institutional demand, deeper liquidity and broader recognition as the main macro-facing crypto asset. JPMorgan’s view is that Ether and altcoins still face weaker market depth, thinner trading breadth and less convincing usage growth outside trading.
That has made investors less willing to rotate capital away from Bitcoin into higher-risk tokens. The gap has become more visible as Bitcoin attracts more structured demand while many smaller tokens remain dependent on short-term sentiment and speculative flows.
JPMorgan Says Weak DeFi Activity is Holding Altcoins Back
The bank pointed to sluggish DeFi activity and limited real-world application demand as key reasons altcoins have lagged Bitcoin. A stronger altcoin cycle usually needs visible growth in lending, payments, tokenized assets, trading activity or application revenue across major networks. JPMorgan’s argument is that those catalysts have not appeared at the scale needed to challenge Bitcoin’s lead.
Security problems have also weighed on sentiment. JPMorgan cited repeated hacks and security failures as another drag on altcoin demand, especially for assets tied to smart contract platforms, bridges and DeFi ecosystems. When those systems suffer large exploits, investors tend to demand a higher risk premium or remain concentrated in Bitcoin.
Ether Needs Stronger Usage to Catch Bitcoin
Ether has shown signs of stabilization, but JPMorgan’s view is that price rebounds alone are not enough. For ETH to catch up to Bitcoin, Ethereum would need stronger fee generation, more durable DeFi growth, greater tokenized asset activity or other network usage that directly increases demand for blockspace and ETH itself.
Technical upgrades may help over time, but JPMorgan has previously warned that improvements to blockchain infrastructure do not automatically create lasting user demand. Without stronger network activity, JPMorgan expects Bitcoin’s performance lead over Ether and the broader altcoin market to persist.
