Ether continues to trail behind Bitcoin in the recent crypto market recovery. Analysts at JPMorgan say that weaker network activities and declining confidence on the altcoin markets have kept the institutional demand geared towards Bitcoin.
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- After the Iran-driven market decline, Bitcoin ETFs (and CME futures) have recovered more quickly than Ether.
- JPMorgan stated that Ethereum upgrades in the last three years have failed to produce meaningful growth of network activity.
- JPMorgan says that investor confidence has continued to be affected by crypto hacks as well as a decline in DeFi activities.
A report According to JPMorgan, led by its managing director Nikolaos Pantigirtzoglou – Bitcoin recovered faster than Ethereum after the recent turmoil in the market linked with the Iran conflict. Bank said that institutional investors are rebuilding exposure to Bitcoin in both the spot exchange traded funds markets and CME Futures Markets at a faster pace than Ether.
JPMorgan reported that spot Bitcoin ETFs had already recovered nearly two thirds of their outflows during the conflict-driven selling off. Spot Ether ETFs recovered just one third of the withdrawals they had made in comparison. This indicates that investors are less interested in Ethereum, even though it has seen a market recovery.
The analysts pointed out that CME data on futures position painted a very similar picture. Analysts noted that the institutional traders’ exposure to Bitcoin has almost been fully recovered, while Ether position on CME is still well below its previous level.
JPMorgan also said that momentum investors such as commodity traders and crypto quants funds still appeared to be underweight both Bitcoin and Ether following the event of deleveraging last October.
The focus has shifted to whether Ethereum’s network upgrade will revive the activity on its blockchain, and help Ether compete with Bitcoin.
JPMorgan stated that Ethereum’s significant upgrades in the past three years did not translate into a stronger network use. The changes have mainly reduced the transaction costs of Layer 2 networks and therefore cut Ethereum’s fee revenues.
The analysts also said that lower fees had weakened Ethereum’s token burning mechanism. This has contributed to faster growth in net supply and reduced one of Ether’s key long-term price supports.
Upgrades are also known as Glamsterdam You can also find out more about the following: Hegota Ethereum’s core layer is expected to be able to scale better by increasing its throughput, reducing costs and improving the base layer. JPMorgan however questioned whether cheap transactions would alone be enough to generate sustained growth in demand for the Ethereum network.
Analysts said that it is still unclear whether upgrades will generate sufficient new activity to counteract the continuing decline in token burning and increase of Ether supply.
JPMorgan stated that altcoins, including Ethereum, have been struggling against Bitcoin in the crypto industry since 2023 due to a weakening of liquidity conditions. JPMorgan cited a thinner market, slowed decentralized finance, and multiple security breaches for investors’ increased caution towards the altcoin markets.
Repeated hacks The report states that operational failures and other issues across the crypto platform have discouraged new investors from investing into altcoins. Bitcoin is now in a strong position because institutional investors are still favoring established digital assets.
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Source: crypto.news
