The cryptocurrency market stands at a pivotal juncture at the start of 2026. Bitcoin (BTC) continues to command significant attention as the digital gold standard, yet mounting evidence suggests Ethereum (ETH) could finally reverse years of relative underperformance and emerge as the standout performer this year.
Major institutions like Standard Chartered have boldly declared 2026 the “year of Ethereum”, echoing the explosive altcoin momentum seen in 2021. With ETH trading around $3,300–$3,350 (showing recent 5–7% daily gains), and BTC near $96,000–$97,000, the stage is set for a potential shift driven by capital rotation, robust on-chain fundamentals, institutional inflows via ETFs, regulatory tailwinds, and a packed roadmap of network upgrade.
Ethereum has long trailed Bitcoin in raw returns during bull cycles, despite its foundational role in smart contracts, DeFi, NFTs, and now tokenized real-world assets (RWAs). From the 2023 bull market onset through late 2025, ETH delivered approximately 160% gains, while BTC posted a staggering 457% (per CoinGecko historical data).
This disparity persisted even as Ethereum underwent transformative upgrades like The Merge (2022) to proof-of-stake and Dencun (2024) for Layer-2 scaling.In 2025, spot Ethereum ETFs launched in July and amassed around $9.9–$12.6 billion in net inflows by year-end, a strong showing but overshadowed by Bitcoin ETFs’ $57.7 billion haul.
ETH’s price peaked near $4,950 in August 2025 but faced headwinds from broader market corrections, ending the year in the low-to-mid $3,000 range.Early 2026 data already hints at reversal: ETH’s year-to-date returns hover around 11%, slightly ahead of BTC’s 8.5% in comparable periods, with recent daily outperformance (ETH +5–7% vs. BTC +3–4%).
The ETH/BTC ratio sits near 0.034–0.035, up modestly year-to-date, signaling early relative strength.
A key precursor to altcoin rallies is falling Bitcoin dominance — BTC’s share of total crypto market cap. It peaked around 65–66% in mid-2025 (possibly July) but has trended lower into 2026, currently hovering at 57–59% (with fluctuations between 56–59% in recent reports). This decline reflects investor diversification into altcoins, particularly Ethereum, as BTC’s ETF market matures and stabilizes.
Experts view this as capital rotation rather than BTC weakness. As Jimmy Xue, co-founder and COO of Axis (a quantitative yield protocol), noted: “A rising ETH/BTC ratio, coupled with stagnating Bitcoin dominance, has historically been associated with the start of an altcoin season.”
This pattern often precedes targeted rallies in large-cap altcoins like ETH, fueled by investors chasing higher beta (volatility-adjusted returns) in the Ethereum ecosystem.
Shivam Thakral, CEO of BuyUCoin, adds that such rotations frequently lead to selective outperformance in Ethereum and other majors. While broad “altseason” remains uncertain — prediction markets assign only ~19% probability before April 2026 — the setup favors Ethereum-specific gains.
Ethereum’s network activity has surged, underscoring real adoption. Daily transactions hit record levels in late 2025, with 2.23 million on December 29 (an all-time high), followed by near-record days into early 2026 (e.g., 1.94–2.13 million on Jan 1–2).
Overall, transaction counts grew ~6.8% year-to-date to averages near 2.05 million, with a 31% spike since mid-December.This boom reflects heavy usage in stablecoins (Ethereum dominates issuance and transfers, with Q4 2025 volumes exceeding $8 trillion), DeFi (TVL share ~64%), and RWAs.
Active addresses reached records (e.g., 10.4 million monthly in December 2025), and unique daily senders/receivers crossed 1 million.These metrics highlight Ethereum’s utility as more than a store of value — it’s the settlement layer for on-chain finance.
Spot Ethereum ETFs continue attracting capital. Recent daily inflows reached $130 million (as of mid-January 2026), with cumulative net inflows since launch around $12.5–$12.6 billion.
Products like BlackRock’s ETHA and Fidelity’s FETH lead, though Grayscale’s ETHE has seen outflows.Thakral highlights growing ETF demand, Layer-2 adoption (reducing fees and boosting throughput), fee burn mechanics (deflationary pressure on ETH supply), restaking growth (via protocols like EigenLayer), and renewed DeFi activity as key drivers.
Standard Chartered’s Geoff Kendrick emphasizes Ethereum’s dominance in stablecoins, RWAs, and DeFi, plus rising network throughput, giving it a “fundamental advantage” over BTC.
The bank forecasts ETH at $7,500 by end-2026 (a new ATH), with longer-term targets of $30,000 (2029) and $40,000 (2030). They expect the ETH/BTC ratio to climb toward 0.08 (2021 highs), implying significant outperformance.
Regulatory progress, like the anticipated U.S. Clarity Act in Q1 2026, could further catalyze inflows.
Ethereum’s roadmap remains aggressive. The Fusaka hard fork (late 2025) boosted data availability and scalability via PeerDAS and expanded blobs.In 2026, Glamsterdam (mid-year target) introduces parallel transaction processing, block-level access lists, enshrined proposer-builder separation (ePBS), and potential gas limit increases (toward 200 million), aiming for higher TPS (potentially 10,000+ with L2s).
This enhances mainnet efficiency for complex DeFi and AI applications.Later upgrades like Heze-Bogota (late 2026) address state bloat, fees, and privacy/decentralization.Xue points to these as positioning Ethereum as the primary layer for the emerging “Agentic AI” economy, where autonomous agents settle on-chain.
Standard Chartered dubs 2026 the year of Ethereum, citing convergence of adoption, sentiment, and flows — mirroring 2021. Conservative targets suggest ETH could reach $7,500 (141%+ from current levels), while optimistic views eye $10,000+.
However, experts caution that recent gains may be cyclical without sustained macro support (e.g., liquidity, lower rates) and execution on upgrades. Broader skepticism persists — altseason odds remain low short-term, and BTC could regain dominance if macro risks materialize.
Ethereum’s blend of utility, institutional backing, and technical momentum positions it strongly to outperform Bitcoin in 2026. Investors should track dominance trends, ETF flows, upgrade milestones, and the ETH/BTC ratio closely.
While past performance isn’t indicative, the catalysts align for a potential breakout year.
Naorem Mohen is the Editor of Signpost News. Explore his views and opinion on X: @laimacha.