JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, have expressed skepticism that the recent surge in Ethereum network activity following the Fusaka upgrade will be sustained. The upgrade, which went live on December 3, expanded the network's maximum data capacity from 15 to 21 blobs per block, leading to an immediate reduction in transaction fees and a subsequent jump in active addresses and transaction volumes.
However, the bank's report argues that historical trends and persistent structural hurdles threaten the durability of these gains. "Historically, Ethereum’s successive upgrades have failed to meaningfully enhance network activity on a sustained basis," the analysts stated, citing several key reasons.
First, the continued migration of activity away from Ethereum's main chain to Layer 2 networks like Base, Arbitrum, and Optimism is a major factor. The report notes that Base alone now generates roughly 60–70% of total revenue for all Ethereum L2s, significantly limiting sustained main-chain growth and fee generation.
Second, intense competition from alternative blockchains, particularly Solana, continues to draw users and developers away with faster and cheaper transactions. This has contributed to a broader shift of onchain activity toward rival ecosystems.
Third, a decline in speculative activity—such as from NFTs, ICOs, and memecoins that drove the 2021–2022 bull cycle—has removed a key historical demand pillar for Ethereum. This activity has either faded or migrated to other chains.
Furthermore, capital is increasingly dispersing into application-specific blockchains. Examples include Uniswap's move to its own Layer 2, Unichain, and dYdX's transition to an independent chain, which redirect liquidity and protocol revenue away from the Ethereum mainnet.
The analysts highlighted that lower main-chain activity has reduced fee burning, contributing to an increase in Ethereum's circulating supply and applying downward pressure on its token economics. They also pointed to a decline in Ethereum's total value locked (in ETH terms) between the Pectra and Fusaka upgrades as a negative signal.
Contrasting with its Ethereum outlook, JPMorgan reaffirmed a bullish $170,000 price target for Bitcoin over the next 6–12 months, citing improving relative volatility and steady institutional flows. The bank also expects wider crypto inflows in 2026, driven largely by institutional investors, following nearly $130 billion in inflows in 2025.
Adding to the uncertainty, several Ethereum researchers expressed skepticism on a recent developer call that the community could ship two additional hard forks in 2026, matching the pace of 2025's upgrades.
