Ether and altcoins continue to underperform Bitcoin! JPMorgan: Unless "on-chain activity heats up," a turnaround will be difficult

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After the geopolitical turmoil, although the cryptocurrency market has welcomed a wave of rebound, Wall Street investment bank JPMorgan Chase stated that market capital still favors Bitcoin. If Ethereum and altcoins continue to lack breakthroughs in real-world application scenarios and activity levels, the weak pattern of underperforming Bitcoin since 2023 may be difficult to reverse. JPMorgan analysts warned in a report that despite the recent gradual recovery of the cryptocurrency market following the sell-off triggered by the Iran geopolitical conflict, the gains of Ethereum and altcoins still significantly lag behind big brother Bitcoin. The analyst team led by JPMorgan Managing Director Nikolaos Panigirtzoglou pointed out: Unless we see substantial improvements in on-chain activity, DeFi, and real-world application scenarios, this weak trend that began in 2023 is unlikely to change easily. Bitcoin Approaches "Full Recovery" The report indicates that during this market repair process, Bitcoin has shown significantly more resilient recovery momentum than Ethereum, whether in spot ETF capital flows or institutional futures positioning. Currently, Bitcoin spot ETFs have recouped approximately two-thirds of the net capital outflows from the previous sell-off; in contrast, Ethereum spot ETFs have barely recovered one-third of their bleeding. Additionally, in futures positioning on the Chicago Mercantile Exchange (CME), institutional capital exposure to Bitcoin has nearly returned to pre-decline levels, while Ethereum futures open interest remains hovering at low levels. Analysts added that affected by last October's deleveraging event, momentum traders including Commodity Trading Advisors (CTAs) and crypto quantitative funds currently maintain a "slightly reduced" conservative wait-and-see attitude toward both leading cryptocurrencies. Ethereum Upgrade Dilemma: Performance Improved, But What About the Price? The market generally hopes that Ethereum's upcoming network upgrade this year can reverse Ethereum's relatively weak performance, but the JPMorgan analyst team holds high skepticism about this. The report points out that looking back at the past 3 years, Ethereum's previous technical upgrades have not driven growth in on-chain activity. On the contrary, these upgrades have mainly focused on reducing Layer 2 transaction costs. Although beneficial for ecosystem expansion, they have directly caused a sharp decline in transaction fees generated on the Ethereum mainnet, significantly weakening Ethereum's "burn mechanism." With reduced burn amounts, Ethereum's net supply increases, conversely creating downward pressure on the coin price. Although the upcoming "Glamsterdam" and "Hegota" upgrades are expected to further enhance Ethereum's scalability by increasing throughput to reduce base layer transaction costs, analysts also question: can these upgrades truly create enough new demand? The next focus of observation is whether these upgrades can successfully boost network activity, or at least drive sufficient demand growth to offset the token supply expansion caused by the weakening of Ethereum's burn mechanism. Altcoin Predicament: Lack of Liquidity and Trust Crisis Regarding other altcoins, the situation is even more difficult. JPMorgan analysts believe that since 2023, altcoins have been mired in liquidity depletion, insufficient market depth, and stagnant DeFi growth. Combined with frequent hacking incidents and endless security vulnerabilities in the crypto sphere, investor confidence has been severely damaged, resulting in low willingness for new capital to enter the market. JPMorgan concluded in the report: "Various negative factors have severely eroded market confidence in the altcoin ecosystem, also causing hot new capital on the sidelines to be reluctant to enter and position themselves." Under Bitcoin's dominant pattern, if Ethereum and altcoins want to regain bullish momentum, in addition to technical hard power, they also need "killer applications" that can integrate into people's daily lives to ignite market enthusiasm.

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