{"id":62345,"date":"2026-01-23T19:21:02","date_gmt":"2026-01-23T16:21:02","guid":{"rendered":"https:\/\/coinengineer.net\/blog\/?p=62345"},"modified":"2026-01-23T19:21:02","modified_gmt":"2026-01-23T16:21:02","slug":"warning-from-jpmorgan-on-ethereum","status":"publish","type":"post","link":"https:\/\/coinengineer.net\/blog\/warning-from-jpmorgan-on-ethereum\/","title":{"rendered":"Warning from JPMorgan on Ethereum!"},"content":{"rendered":"<p>Recent improvements in technical and on-chain data on the Ethereum network have created cautious optimism in the markets. However, JPMorgan, one of Wall Street\u2019s leading financial institutions, has stated that there are question marks over whether this positive outlook is sustainable in the long term. While the bank acknowledges that recent Ethereum upgrades have delivered a short-term boost, it warns that structural issues remain unresolved.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_71 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/coinengineer.net\/blog\/warning-from-jpmorgan-on-ethereum\/#Fusaka_Upgrade_Boosted_Activity\" title=\"Fusaka Upgrade Boosted Activity\">Fusaka Upgrade Boosted Activity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/coinengineer.net\/blog\/warning-from-jpmorgan-on-ethereum\/#L2s_and_Competing_Networks_Increase_Pressure\" title=\"L2s and Competing Networks Increase Pressure\">L2s and Competing Networks Increase Pressure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/coinengineer.net\/blog\/warning-from-jpmorgan-on-ethereum\/#Capital_Fragmentation_and_the_ETH_Supply_Issue\" title=\"Capital Fragmentation and the ETH Supply Issue\">Capital Fragmentation and the ETH Supply Issue<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Fusaka_Upgrade_Boosted_Activity\"><\/span>Fusaka Upgrade Boosted Activity<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In a note shared with clients, JPMorgan stated that the Fusaka upgrade, rolled out in December, significantly expanded Ethereum\u2019s data capacity. According to the bank, this technical update eased data flow on the network, led to a rapid decline in transaction fees, and generated a short-term increase in both transaction volume and active addresses.<\/p>\n<p>The Fusaka upgrade increased the number of \u201cblobs\u201d that can be written per block, aiming to reduce costs particularly for layer-2 (L2) networks that rely on Ethereum mainnet for data availability. This change partially alleviated the capacity bottlenecks that emerged after previous upgrades, reducing congestion on the network. JPMorgan analysts note that while this improvement is technically positive, it remains unclear whether its impact will be sustainable over the long term.<\/p>\n<p>According to the report, Fusaka builds on the Pectra upgrade introduced in early 2025. Pectra had partially revived mainnet activity, which weakened after users migrated to L2 networks following the Dencun upgrade. However, JPMorgan analysts point out that similar technical improvements in the past have tended to lose their effect over time. A team led by chief analyst Nikolaos Panigirtzoglou emphasizes that successive Ethereum upgrades have historically failed to generate a lasting increase in network activity.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"L2s_and_Competing_Networks_Increase_Pressure\"><\/span>L2s and Competing Networks Increase Pressure<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>According to JPMorgan, the pressure on Ethereum is not limited to the mainnet. The report highlights that network activity continues to shift toward layer-2 solutions such as Base, Arbitrum, and Optimism. In particular, Base\u2019s rise as a major revenue generator within the L2 ecosystem signals weakening economic activity on the mainnet.<\/p>\n<p>At the same time, competition from faster and lower-cost blockchains like Solana is intensifying the pressure on Ethereum. JPMorgan analysts note that speculative trends\u2014such as NFTs, memecoins, and ICO-driven activity\u2014that previously supported network demand have largely faded, leading to declines in transaction volume and user activity. Taken together, these factors raise further doubts about the durability of Ethereum\u2019s current recovery.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Capital_Fragmentation_and_the_ETH_Supply_Issue\"><\/span>Capital Fragmentation and the ETH Supply Issue<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Analysts also warn that the shift toward application-specific chains poses a significant risk for Ethereum. Major projects such as Uniswap and dYdX migrating to their own chains have led to liquidity and revenue moving away from the Ethereum ecosystem. As a result, burned transaction fees have declined, ETH supply has increased, and total value locked (TVL) measured in ETH terms has fallen.<\/p>\n<p>JPMorgan acknowledges that the Fusaka upgrade has delivered a clear short-term revival on the Ethereum network. However, the bank stresses that structural challenges persist and urges caution in interpreting the recent increase in activity as a sign of a lasting transformation. Ethereum\u2019s long-term performance will continue to depend not only on technical upgrades, but also on the competitive landscape and broader ecosystem dynamics.<\/p>\n<p class=\"darkmysite_style_txt_border darkmysite_processed\" data-start=\"4050\" data-end=\"4267\" data-darkmysite_alpha_bg=\"rgba(0, 0, 0, 0)\"><em class=\"darkmysite_style_txt_border darkmysite_processed\" data-darkmysite_alpha_bg=\"rgba(0, 0, 0, 0)\">You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don\u2019t forget to follow us on our\u00a0<a class=\"darkmysite_style_txt_border darkmysite_style_link darkmysite_processed\" href=\"https:\/\/t.me\/coinengineernews\" target=\"_blank\" rel=\"nofollow noopener\" data-darkmysite_alpha_bg=\"rgba(0, 0, 0, 0)\">Telegram,\u00a0<\/a><a class=\"darkmysite_style_txt_border darkmysite_style_link darkmysite_processed\" href=\"https:\/\/www.youtube.com\/@CoinEngineer\" target=\"_blank\" rel=\"nofollow noopener\" data-darkmysite_alpha_bg=\"rgba(0, 0, 0, 0)\">YouTube<\/a>,\u00a0and\u00a0<a class=\"darkmysite_style_txt_border darkmysite_style_link darkmysite_processed\" href=\"https:\/\/twitter.com\/coinengineers\" target=\"_blank\" rel=\"nofollow noopener\" data-darkmysite_alpha_bg=\"rgba(0, 0, 0, 0)\">Twitter<\/a>\u00a0channels for the latest\u00a0<a class=\"darkmysite_style_txt_border darkmysite_style_link darkmysite_processed\" title=\"News\" href=\"https:\/\/coinengineer.net\/blog\/news\/\" data-internallinksmanager029f6b8e52c=\"7\" data-darkmysite_alpha_bg=\"rgba(0, 0, 0, 0)\">news<\/a>\u00a0and updates.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recent improvements in technical and on-chain data on the Ethereum network have created cautious optimism in the markets. However, JPMorgan, one of Wall Street\u2019s leading financial institutions, has stated that there are question marks over whether this positive outlook is sustainable in the long term. While the bank acknowledges that recent Ethereum upgrades have delivered<\/p>\n","protected":false},"author":37,"featured_media":38495,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,2],"tags":[393,840,847,336,58,5760,105,1770,1374],"class_list":["post-62345","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-news","category-news","tag-crypto","tag-crypto-market","tag-crypto-news","tag-cryptocurrencies","tag-cryptocurrency","tag-digital-assets","tag-ethereum","tag-ethereum-eth","tag-jp-morgan"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Warning from JPMorgan on Ethereum!<\/title>\n<meta name=\"description\" content=\"Recent improvements in technical and on-chain data on the Ethereum network have created cautious optimism in the markets.\" \/>\n<meta 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