Bitcoin, Solana Rise In January, But Ethereum Lagging: JPMorgan

The cryptocurrency market saw Layer-1 blockchain market capitalizations rise by 6% in January 2025, despite mixed performance across different segments of the industry, according to a report by J.P. Morgan JPM.

What Happened: The report highlights a divergence between large-cap cryptocurrencies, which posted gains, and smaller altcoins, which generally underperformed.

Average daily trading volumes declined by 24%, reflecting a cooling-off period following the strong market performance in December 2024.

Bitcoin BTC/USD and Solana SOL/USD were the primary contributors to market cap growth in January, with Bitcoin rising 10% and Solana surging 25% over the month.

In contrast, Ethereum ETH/USD saw its market capitalization decline by one percent.

J.P. Morgan analysts emphasized that market appreciation was concentrated in a few large-cap cryptocurrencies, while most smaller Layer-1 tokens, including Polkadot DOT/USD, Avalanche AVAX/USD, and Toncoin TON/USD, experienced double-digit losses in their market caps.

The report stated that the absolute change in the collective market capitalization for Layer-1 protocol tokens, excluding Bitcoin and Ethereum, rose 6% month-over-month.

However, the report also noted that the group’s monthly average market capitalization actually declined by 2%.

Ethereum struggled in January, with its market capitalization shrinking by one percent to approximately $398 billion.

Its trading volumes also fell by 25%, according to TradingView data.

J.P. Morgan analysts noted that Ethereum’s underperformance relative to Bitcoin was reflected in the Bitcoin-to-Ethereum market capitalization ratio, which rose 11% month-over-month.

This suggests that investors favored Bitcoin over Ethereum in the current market cycle.

Also Read: Poland Rejects Bitcoin Reserves As Czech Republic And US Explore Crypto Holdings

The cryptocurrency market in January also responded to regulatory shifts under the new United States administration.

J.P. Morgan highlighted that the Securities and Exchange Commission repealed the controversial rule requiring banks offering digital asset custody to classify it as both an asset and a liability.

Additionally, the White House established a working group for digital assets, led by a newly appointed policy official.

The spot Bitcoin exchange-traded products reached their one-year anniversary in January.

Over the past year, these products attracted $36.5 billion in inflows, with BlackRock's product emerging as the market leader, amassing $37.7 billion in net inflows.

In January alone, Bitcoin exchange-traded products attracted 5.2 billion dollars, while Ethereum products recorded only $100 million dollars in new net inflows.

Analysts at J.P. Morgan emphasized that January marked the fourth-best month of net flows for Bitcoin exchange-traded products since their launch in 2024.

The Bitcoin mining sector experienced a relatively quiet month in terms of network hashrate growth, with hashrate rising by only one percent to 785 exahashes per second.

However, block reward revenue remained stable at $57,200 per exahash per second, contributing to a $50 million investment from SoftBank into Cipher Mining.

Meanwhile, the CME Group announced the launch of daily expiring options on Bitcoin futures, further expanding its cryptocurrency derivatives offerings.

Ethereum’s next major protocol upgrade, expected in March 2025, aims to double the number of processing units per block from three to six, increasing the capacity for Layer-2 transactions to 420 transactions per second.

Despite a decline in trading volumes and ongoing regulatory uncertainty, the cryptocurrency market maintained strong valuations, with Layer-1 protocols posting a 6 percent market capitalization gain in January 2025.

Bitcoin continued to dominate, while Ethereum underperformed ahead of its upcoming upgrade.

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