Ethereum Faces 'Intense Competition' From Solana, Struggles To Compete With Bitcoin: JPMorgan

Ethereum‘s ETH/USD dominance in the cryptocurrency space is facing a significant challenge, with analysts at JPMorgan suggesting that increased competition from rival blockchains is eroding its market share and threatening its long-term prospects.

What Happened: According to a report led by JPMorgan’s managing director Nikolaos Panigirtzoglou, ETH has underperformed both Bitcoin BTC/USD and a range of alternative cryptocurrencies since the recent U.S. election, signaling a worrying trend for investors, The Block reported on Thursday.

JPMorgan analysts attribute Ethereum’s struggles to two main factors:

• Increasing competition from more scalable and cost-effective blockchains like Solana SOL/USD and Layer 2 networks
• A lack of a compelling narrative compared to Bitcoin’s position as a store of value.

Despite Ethereum’s recent Dencun upgrade, activity has increasingly shifted to Layer-2 networks at the expense of Ethereum itself.

The migration of top decentralized applications to application-specific chains is also noted as a concern.

This shift could reduce Ethereum’s fee revenue and increase the risk of the network becoming inflationary due to reduced token burn.

While Ethereum maintains leadership in stablecoins, DeFi, and tokenization, the analysts express uncertainty about its ability to maintain this dominance.

Recent efforts to boost institutional adoption are noted, but the JPMorgan team concludes that “competition from other networks is likely to remain intense in the foreseeable future.”

Why It Matters: The note comes as Ethereum has sunk under the $3,000 threshold, plummeting as low as $2,200 on Monday.

The second-biggest cryptocurrency has yet to make a new all-time high since 2021, notably underperforming Bitcoin and Solana to the dismay of investors.

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