Ethereum Pectra Upgrade Has Failed to Boost Network Use: JPMorgan

In a new report, analysts at JPMorgan revealed that Ethereum’s latest upgrade, Pectra, has not increased network activity, although it brought technical improvements and made Ethereum more attractive to large financial institutions. 

Nevertheless, the real use of the blockchain remains slow. Daily transactions and wallet activity have not increased, and retail interest is still low.

Ethereum Pectra Upgrade Brought Major Improvements 

After much anticipation, the Pectra upgrade launched on Ethereum earlier this month with notable improvements. It made staking easier, gave bigger rewards, and made deposits and withdrawals faster. 

Ethereum’s market cap and price also increased significantly. The Pectra upgrade also added new standards like ERC-3643 and ERC-1400. These features were designed to help comply with financial laws such as Know Your Customer (KYC) and Anti-Money Laundering (AML). 

These changes aim to help Ethereum work better with traditional finance. The support from Depository Trust and Clearing Corporation (DTCC), a major U.S. financial group, shows Ethereum’s growing role in regulated financial markets.

Ethereum Focuses on Institutions Over Everyday Users

JPMorgan believes Ethereum is following a path similar to Bitcoin by targeting large investors rather than individual users. While other blockchains focus on memecoins and retail trading, Ethereum is trying to attract serious companies and financial players.

On the Chicago Mercantile Exchange (CME), more institutional investors are betting on Ethereum’s future. Long positions in Ethereum’s future have gone up sharply. However, spot Ethereum Exchange Traded Funds (ETFs) have only seen small investments compared to Bitcoin ETFs. 

Bitcoin ETFs gained massive inflows after President Donald Trump won the election in November 2024.

Ethereum Network Activity Still Low

Despite these growing institutional interests, Ethereum’s on-chain activity has not improved. Reportedly, daily transactions and active wallets on the network remain low. Likewise, Gas fees have plummeted. 

While reduced gas fees benefit users, they also suggest weaker demand. Notably, the rise of Layer 2 solutions helps lower costs and moves traffic off the leading Ethereum network.

JPMorgan analysts also raised concerns over Ethereum’s circulating supply. Since the Dencun upgrade, more ETH has been released, raising fears that Ethereum might become inflationary again.

Analysts at JPMorgan continue to carefully consider Ethereum’s future. In February, the bank said Ethereum will still face strong competition from other blockchains. On the other hand, Bitcoin is expected to stay ahead of Ethereum and other coins until at least 2025.