Ethereum has outperformed Bitcoin in recent weeks. JPMorgan: This trend is expected to continue

Since April alone, Ethereum has risen by more than 40% and is currently hovering around $2,700, not far from its all-time high of $2,750 set on Tuesday. Bitcoin, on the other hand, has fallen by 8% over the same period and is currently struggling around $55,000, about $10,000 below its all-time high.

JPMorgan Chase pointed out the difference between Ethereum and Bitcoin, saying that Bitcoin is more like a commodity than a currency, a means of storing value that competes with gold. Ethereum is "the backbone of the crypto economy and functions as a medium of exchange." The bank pointed out that Ethereum should outperform Bitcoin in the long run.

JPMorgan also gave its opinion on the reasons why Ethereum has outperformed Bitcoin in recent days. The bank pointed out that the first reason is that Ethereum has better liquidity conditions. Last week, the liquidity shock hit cryptocurrencies hard, and almost all cryptocurrencies were affected, but Bitcoin was hit much harder than Ethereum.

"This liquidity shock originated from the derivatives market, resulting in large-scale liquidations. This had a greater impact on Bitcoin futures, with net long liquidations since then totaling 23% of previous open interest, while Ethereum net long liquidations over the same period were 17%," JPMorgan said. "This suggests that Ethereum futures have better liquidity conditions relative to Bitcoin futures."

“Higher volumes on the public Ethereum blockchain mean that a significantly higher proportion of these tokens are highly liquid, further attenuating the impact of futures liquidations,” the bank said.

JPMorgan Chase pointed to Ethereum's lower reliance on derivatives markets as a second reason. "Ethereum's valuation may be less dependent on leverage demand than Bitcoin, which is an important technical driver," JPMorgan said.

The bank also believes that Ethereum has a more durable underlying demand base. “The Ethereum network has long been characterized by higher transaction speeds on the public blockchain than Bitcoin, likely due in large part to increased activity on decentralized finance (DeFi) and other platforms,” JPMorgan noted.

Simon Peters, a market analyst at online investment platform eToro, attributed Ethereum’s recent growth to a wave of demand from institutional investors.

“Behind this is increased demand from institutional investors. While they may have some exposure to Bitcoin now, institutions are now diversifying their exposure and Ethereum is the natural next choice, which will further benefit the second-largest crypto asset by market cap,” he said.