JPMorgan analysts say Ethereum’s recent surge in network activity after the Fusaka upgrade may be short-lived. While the upgrade lowered fees and temporarily boosted transactions and active addresses, the bank argues that long-standing structural issues remain unresolved.

They point to continued migration of activity to Layer 2 networks, growing competition from faster and cheaper blockchains like Solana, and the fading of speculative drivers such as NFTs, ICOs, and memecoins. In addition, capital is increasingly moving to application-specific chains, reducing Ethereum main-chain usage.

These trends have weakened Ethereum’s fee generation and token economics, leading to less fee burning, a rising circulating supply, and downward pressure on ETH’s price. JPMorgan also notes declining ETH-denominated total value locked between recent upgrades.

Overall, JPMorgan is skeptical that Fusaka’s activity boost will be sustainable and remains less bullish on ETH than on bitcoin, while still expecting continued crypto inflows driven mainly by institutional investors.