Catenaa, Wednesday, June 04, 2025-Ethereum’s recent upgrades, including the Pectra update, have not led to significant increases in onchain activity, according to analysts at JPMorgan.
While the Pectra upgrade helped lift ether’s price and market capitalization, network usage has remained largely unchanged.
JPMorgan managing director Nikolaos Panigirtzoglou and his team said the surge in Ethereum’s market cap likely stems from increased institutional interest rather than stronger retail engagement.
The Pectra upgrade bundled improvements aimed at enhancing staking efficiency, rewards, and transaction speeds—features appealing to institutional investors.
The bank noted Ethereum’s adoption of security token standards such as ERC-3643 and ERC-1400, which facilitate compliance with traditional financial regulations including KYC and AML requirements.
These developments, along with institutional support from entities like the Depository Trust and Clearing Corporation, signal Ethereum’s strategic shift toward institutional markets, distinguishing it from competitor platforms focused on retail users.
Despite rising institutional activity seen in CME futures, retail participation remains weak, with limited inflows into spot Ethereum ETFs compared to bitcoin. JPMorgan also flagged stagnant daily transactions and active addresses, as well as a decline in transaction fees driven by increased Layer 2 adoption.
Meanwhile, Ethereum’s circulating supply has increased since the Dencun upgrade, raising concerns about inflationary pressures amid subdued network use.
The analysts remain cautious on Ethereum’s outlook, citing ongoing competition from rival blockchains and the continued dominance of bitcoin through 2025.
