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▲ Bitcoin (BTC), Altcoin / ChatGPT generated image
An analysis from JP Morgan suggests that Bitcoin (BTC) is significantly outperforming Ethereum (ETH) and the altcoin market. Ethereum and the broader altcoin market have been underperforming Bitcoin for several years, and this trend is expected to continue unless network activity, real-world usability, and decentralized finance adoption significantly recover.
According to U.Today on May 20 (local time), an analysis team led by Nikolaos Panigirtzoglou, Managing Director at JP Morgan, stated that Ethereum has continued to lag behind Bitcoin in terms of price trends and institutional capital inflows since the overall deleveraging of the cryptocurrency market in October last year.
At the beginning of this year, the cryptocurrency market faced strong pressure due to inflation concerns and weakening preference for risk assets. However, in the subsequent recovery phase, Bitcoin's rebound was distinctly stronger than Ethereum's. The gap was also confirmed in the institutional market. Bitcoin spot ETFs recovered approximately two-thirds of their previous outflows, while Ethereum spot ETFs only recouped about one-third of their previous losses.
JP Morgan also analyzed that momentum traders are not taking aggressive long positions on either of the two major assets. Momentum investors, including crypto quant funds and Commodity Trading Advisors (CTAs), were assessed to have maintained a slight underweight position on both Bitcoin and Ethereum.
Ethereum is anticipating major network upgrades, such as Glamsterdam and Hegota, aimed at enhancing scalability by 2026. However, JP Morgan believes that these upgrades are unlikely to act as strong upward catalysts, citing that past upgrades have not led to a significant increase in on-chain activity.
Security issues surrounding the decentralized finance market were also identified as a factor hindering institutional capital inflows. JP Morgan analyzed that recurring security incidents are actively preventing traditional financial institutions from committing capital to decentralized finance. It explained that localized breaches escalating into widespread liquidity shocks cause risk-averse institutions to remain on the sidelines.
Conversely, corporate capital is flowing directly into Bitcoin. JP Morgan's research department projected that if Strategy maintains its current pace, it could purchase $30 billion worth of Bitcoin in 2026 alone. The flow of institutional and corporate capital towards Bitcoin further highlights the relative underperformance of the Ethereum and altcoin markets.
Citing the JP Morgan report, U.Today reported that Ethereum and altcoins need increased network activity, real-world usability, and expanded decentralized finance adoption to close the gap with Bitcoin. Bitcoin is strengthening its dominance over Ethereum, driven by institutional capital recovery and corporate purchasing trends.
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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