JPMorgan warns: Ethereum faces flat growth, weak demand post-upgrade

• Ethereum upgrades attract institutions but fail to boost on-chain user activity.
• ETH sees record inflows despite muted retail interest and rising inflation concerns.

Despite Ethereum [ETH]‘s recent Pectra upgrade offering institutional-friendly features like improved staking efficiency and quicker fund movement, it hasn’t sparked a notable rise in on-chain activity.

JPMorgan issues warning

Although the upgrade strengthens Ethereum’s infrastructure and differentiates it from competitors, JPMorgan analysts believe past upgrades haven’t significantly boosted network activity.

The latest developments highlight a growing gap between Ethereum’s technical progress and actual user engagement on the blockchain.

Ethereum’s pivot toward institutional adoption is further underscored by its integration of token standards like ERC-3643 and ERC-1400, frameworks specifically tailored for tokenized securities.

These standards embed crucial compliance features such as KYC and AML protocols, aligning the Ethereum network more closely with the regulatory demands of traditional finance.

This strategic alignment not only enhances Ethereum’s appeal to regulated institutions but also signals growing acceptance among key financial infrastructure players. 

This includes backing from entities like the Depository Trust and Clearing Corporation (DTCC).

The analyst said,

“This strategic shift towards encouraging further institutional engagement mirrors the trend seen in Bitcoin, where corporate and institutional engagement has significantly enhanced its appeal.” 

They added, 

“In this way, Ethereum is distinguishing itself from competitor platforms that primarily rely on individual user engagement, as evidenced by the significant meme coin activity on those competitor platforms.”

What’s behind this concern?

JPMorgan analysts pointed out that Ethereum’s institutional appeal is becoming evident in CME Futures activity, where there’s been a notable rise in long positions—a signal of growing interest from institutional players.

However, this contrasts with the limited inflows into spot Ethereum ETFs, especially when measured against the surge seen in Bitcoin ETFs after Trump’s election victory.

This divergence highlights a gap in retail enthusiasm.

Despite enhancements to the Ethereum network, on-chain metrics such as daily transaction counts and active addresses have remained relatively stagnant.

While total value locked (TVL) in ETH has increased, reflecting more lending and borrowing activity, its growth in dollar terms has been comparatively subdued.

Ethereum’s market trend

Despite lingering concerns over Ethereum’s inflationary pressures and stiff competition from rival chains, recent developments suggest a possible turning point.

With the Pectra upgrade and rising institutional demand, Ethereum is beginning to reclaim its position in the market.

Ethereum recently notched its highest weekly inflow of 2025 at $205 million, signaling a notable shift in sentiment.

While JPMorgan analysts remain cautious, pointing to falling fees, increased Layer 2 activity, and a rising circulating supply, Ethereum’s ability to attract capital even amid a 2.93% price dip underscores its resilience.

Whether this momentum can sustain remains to be seen, but the tide may finally be turning in ETH’s favor.