According to a report from JPMorgan led by managing director Nikolaos Panigirtzoglou, Bitcoin has recovered much faster than Ethereum following recent market turbulence linked to geopolitical tensions involving Iran. The bank said institutional investors have rebuilt exposure to Bitcoin across both spot exchange-traded funds and CME futures markets at a pace not seen with Ether. Spot Bitcoin ETFs have already regained nearly two-thirds of the capital that was withdrawn during the selloff triggered by the conflict, while spot Ethereum ETF products have recovered only around one-third of their earlier outflows, indicating weaker institutional demand for Ethereum despite the market rebound. As reported by The Block, this gap reinforces the idea that institutions continue to treat Bitcoin as the primary vehicle for crypto exposure during periods of macro uncertainty, with the divergence highlighting a broader shift in how institutional capital evaluates crypto exposure. The analysts emphasize that Ethereum and altcoins may continue underperforming Bitcoin unless the network demonstrates stronger network activity, DeFi growth, and real-world adoption, with utility remaining the key metric for institutional adoption.
The incoming Fed chair Kevin Warsh faces immediate market pressure as Treasury yields have broken higher into his first days, with the 30-year near 5.07%, the 10-year around 4.53%, and the 2-year above 4.07%, now sitting over the Fed's 3.7% upper bound. Bond managers are blunt about the implications, with Vincent Ahn noting that "Warsh wanted the option to cut on day one... the bond market just took that option off the table for him." Markets are now pricing roughly 40% odds of a hike by December and almost no chance of cuts, creating what analysts describe as a 1994-style test regime for crypto. The higher real yields increase the opportunity cost of holding non-yielding assets like cryptocurrencies, pulling marginal capital toward Treasuries and tightening financial conditions for everything relying on cheap dollar leverage. The CoinGlass Crypto Fear and Greed Index remains stuck at 42 in "fear" territory, reflecting the sentiment impact of these rate repricing pressures.
JPMorgan said Ethereum's major upgrades over the last three years have not translated into stronger network usage. Instead, the changes largely reduced transaction costs on Layer 2 networks, cutting fee revenue generated on Ethereum's main chain. Lower fees have also weakened Ethereum's token burn mechanism, contributing to faster net supply growth and reducing one of the key sources of long-term price support for Ether. The analysts said it remains unclear whether upcoming upgrades can generate enough new activity to offset the continued decline in token burns and the resulting increase in Ether supply. According to The Block, the key uncertainty is whether these upgrades can meaningfully reverse declining base-layer usage and offset the continued reduction in token burns, with weak network growth and declining user activity limiting upside momentum for Ethereum and other alternative cryptocurrencies. The current phase of crypto development mirrors early Amazon adoption, where public understanding remains limited by technical complexity and utility confusion across various crypto layers.
Scheduled upgrades known as Glamsterdam and Hegota are expected to improve scalability by increasing throughput and reducing costs on Ethereum's base layer. However, JPMorgan questioned whether cheaper transactions alone would be enough to create sustained demand growth across the network. The analysts said it remains unclear whether the upgrades can generate enough new activity to offset the continued decline in token burns and the resulting increase in Ether supply. As reported by The Block, this divergence suggests that Ethereum's future performance will depend less on market cycles alone and more on its ability to demonstrate tangible improvements in on-chain demand and value capture. Without that, Bitcoin is likely to continue consolidating its dominance as the preferred institutional crypto asset, especially in environments where liquidity and risk appetite remain uncertain.
Data from CME futures positioning painted a similar picture, with institutional traders having almost fully restored their previous Bitcoin exposure while Ether positioning on CME remains well below earlier levels. According to JPMorgan, institutional positioning in CME Bitcoin futures has almost fully recovered to pre-selloff levels, indicating a rapid normalization of exposure. However, Ethereum futures positioning on CME remains significantly below earlier highs, suggesting that institutional conviction in Ether has not returned with the same strength. The bank also pointed out that momentum-driven participants, including commodity trading advisors and quantitative crypto funds, are still slightly underweight both Bitcoin and Ether following the major deleveraging event seen in October. This positioning suggests continued caution in the altcoin market despite recent recovery attempts, with the Warsh era creating additional headwinds through higher discount rates on long-duration crypto bets from L1s to AI and RWA tokens.
