Ethereum’s newest improve sparked a burst of exercise, however Wall Avenue financial institution JPMorgan (JPM) is skeptical it can final.
In a Wednesday notice to shoppers, the financial institution stated December’s Fusaka improve expanded information capability and drove an instantaneous drop in charges alongside a bounce in transactions and lively addresses.
Fusaka builds on the Pectra improve earlier in 2025, the report stated, which helped revive utilization after the Dencun improve pushed exercise towards layer-2 networks. Whereas the mixed upgrades lifted community exercise over the previous yr, the financial institution warned that previously, related rebounds have tended to fade.
“Traditionally, Ethereum’s successive upgrades have did not meaningfully improve community exercise on a sustained foundation,” analysts led by Nikolaos Panigirtzoglou wrote.
Fusaka expanded the community’s information capability by rising the variety of “blobs” per block, a change aimed toward reducing transaction prices and bettering throughput, significantly for layer-2 networks that depend on the blockchain for information availability.
By permitting extra information to be posted per block, Fusaka helped ease congestion and pushed charges decrease, addressing a bottleneck that emerged after earlier upgrades shifted exercise away from the principle chain.
The layer 2s themselves are including to the strain. The analysts pointed to the continued shift of exercise to blockchains equivalent to Base, Arbitrum and Optimism, noting that Base now generates the vast majority of layer-2 income.
The financial institution’s analysts additionally flagged rising competitors from sooner, cheaper blockchains like Solana, in addition to the fading of speculative booms tied to non-fungible tokens (NFTs), memecoins and preliminary coin choices (ICOs).
A layer 1 community is the bottom layer, or the underlying infrastructure of a blockchain. Layer 2 refers to a set of offchain methods or separate blockchains constructed on high of layer 1s.
Capital is fragmenting throughout application-specific chains, the analysts stated, citing strikes by Uniswap and dYdX which have diverted liquidity and income away from Ethereum. The outcome has been decrease charge burning, rising ether ETH$2,966.59 provide and a decline in complete worth locked (TVL) in ETH phrases.
Fusaka delivered a transparent short-term increase, however persistent structural headwinds depart the financial institution uncertain that Ethereum’s newest exercise surge marks a long-lasting turnaround.
The world’s second-largest cryptocurrency was buying and selling 2.2% larger at $2,992 at publication time.
Learn extra: Staking goes mainstream: what 2026 may appear like for ether traders
