Ethereum’s retreat into Bitcoin is no longer just a price story. JPMorgan says the plumbing within the organization now supports that. $BTC Resolutely pushed the flow forward and broke away $ETH And the broader altcoin complex is struggling to keep up.
According to a research note compiled by CoinMarketCap Academy and other media outlets, JPMorgan analysts led by Managing Director Nikolaos Panigirtzoglou are$ETH) and the broader altcoin market will continue to “continue to support Bitcoin ($BTCBarring “meaningful improvements” in network activity, decentralized finance (DeFi) adoption, and real-world applications, banks will backdate the current divergence to deleveraging in October 2025. At this time, a sharp geopolitically driven decline triggered a large-scale liquidation. $ETH Products related to $BTCThis is especially true among systematic traders and crypto-native traders. The market has stabilized since then, but analysts say: $ETH It has not been able to fully recover lost ground, both in terms of prices and key institutional flow indicators.
JPMorgan highlights spot ETF flows as one of the clearest signs of that gap. The bank estimates that the Spot Bitcoin ETF has now recovered about two-thirds of the outflows incurred during the October 2025 drawdown, while the Spot Ether ETF has only recovered about one-third of the redemptions during the same period. A similar story can be seen with the futures positioning of the Chicago Mercantile Exchange (CME). Institutional Bitcoin exposure to regulated futures has “almost fully recovered” to pre-crash levels; $ETH Futures open interest and net long positions remain well below previous peaks. Momentum-driven players such as commodity trading advisors and quantitative funds are described as “slightly underweight” both assets, but the underweight is more pronounced. $ETHThis reflects the significant deleveraging endured last October.
JP Morgan points out fundamentals beyond flows. The memo claims that despite Ethereum’s series of upgrades over the past three years, the network has not generated “meaningful” growth in on-chain activity. In other words, DeFi trading volumes have plateaued, total value locked remains below cycle highs, and user numbers and transaction fees are not showing sustained expansion to justify a sharp reassessment of Bitcoin. Base layer prices are also cheaper. $ETH Token burn based on EIP-1559 will contribute to a rapid increase in net supply, undermining one of the core “ultra-sound money” narratives that once distinguished Ethereum from other smart contract platforms.
Regarding altcoins more broadly, the bank cited diluted liquidity, low order book depth, and a series of security incidents as factors weighing on sentiment and inhibiting new institutional capital. “All these factors are undermining confidence in the broader altcoin ecosystem and hindering the deployment of new capital,” the analysts wrote, adding that Bitcoin benefits from the perception of a “safer” macro and regulatory bet within the crypto complex. JP Morgan’s work from earlier this year is already framed. $BTC It said ETFs are “clear winners” in terms of resilience and institutional positioning, noting that Bitcoin products have maintained net inflows even as some gold and silver funds have seen outflows.
The implication of the latest memo is clear: Upgrades alone won’t save you. $ETHrelative trade. Unless Ethereum can reignite on-chain activity, particularly DeFi, real-world assets, and other non-speculative use cases, and demonstrate that those flows lead to fee income and token demand, JPMorgan expects Bitcoin to continue to lead in both price performance and attracting the next wave of institutional inflows.
