J.P. Morgan Issues a Gloomy Forecast for Ethereum

Ignacio Teson•Friday, February 7, 2025•1 min read

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Analysts from the renowned global bank claim that Ethereum is underperforming as competition from rival blockchains intensifies.

According to J.P. Morgan analysts, Ethereum is likely to continue facing “intense competition” from other blockchain networks, which does not bode well for the second-largest cryptocurrency by market capitalization. While the overall crypto market surged around the U.S. elections, Ethereum’s native token, ETH, lagged behind—not only trailing Bitcoin but also underperforming several altcoins, the analysts noted.

Troubling Signs for Ethereum

ETH’s share of the total cryptocurrency market capitalization has dropped to its lowest level in four years, highlighting growing pressure from competitors, according to analysts.

They point to two key reasons for this decline:

1. The rising competition from blockchains like Solana and Layer 2 networks that offer lower fees and greater scalability.
2. Ethereum’s lack of a strong narrative compared to Bitcoin’s positioning as a store of value.

Even after Ethereum’s Dencun upgrade introduced blobs to lower transaction fees and enhance scalability, activity has increasingly shifted from Ethereum’s main network to Layer 2 solutions, further weakening its base chain, analysts warn.

Why a Declining Market Share Signals Lower Adoption

A shrinking market share suggests that Ethereum is losing ground to alternative blockchains, which can lead to lower adoption rates over time. When users and developers migrate to competing platforms that offer better efficiency, lower costs, or stronger narratives, Ethereum risks becoming less relevant in the broader crypto ecosystem. This could impact its long-term security, network effects, and overall role in the industry.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.