From 160% to 457%, the five main reasons Ethereum is catching up with Bitcoin

Since 2023, Ethereum has experienced a cumulative increase of approximately 160%, far below Bitcoin’s 457%. Behind this figure lies the long-standing “second asset dilemma” that has troubled the market. However, entering 2026, multiple catalytic factors are stacking up, and discussions about whether Ethereum can achieve a reversal are heating up significantly. From capital rotation to on-chain fundamentals, a series of signals are quietly changing.

Historical Background of ETH’s Relative Weakness

Bitcoin’s market share briefly rose to 66% at the beginning of 2026 before starting to decline, marking a critical turning point. This reflects a loosening of the dominance of a single leading asset, with funds rotating into other mainstream cryptocurrencies. Meanwhile, the ETH/BTC exchange rate has increased by about 3.6% year-to-date, which is a subtle but important signal—when this rate rises, it usually indicates an increase in market risk appetite and a phase of outperformance for altcoins.

Data shows that this divergence is indeed showing signs of loosening. Although ETH has been relatively weak for several years, the market structure is changing.

Five Major Catalytic Factors Stacking Up

Reconfiguration of Capital Structure

The stagnation of Bitcoin’s dominance is not accidental. Jimmy Xue, co-founder of the quantitative yield protocol Axis, pointed out that after Bitcoin ETF demand stabilized, some funds began seeking higher risk-adjusted returns within the Ethereum ecosystem. This is not because ETH itself has become stronger, but because market risk appetite is changing.

Corporate actions also confirm this. According to the latest news, BitMine Immersion Technologies added about 32,977 ETH, bringing their total holdings to approximately 4.14 million ETH, maintaining a leading position among enterprise-level Ethereum treasuries. Bit Digital is also continuously expanding, adding 31,057 ETH. These institutional-level deployments reflect recognition of Ethereum’s long-term value.

On-Chain Fundamentals Warm Up

Ethereum’s network performance in 2026 is improving. Data shows that the average daily transaction volume has reached 2.05 million transactions, a 6.8% year-over-year increase, with growth exceeding 30% since mid-December last year. What does this mean? DeFi, Layer 2 solutions, and re-staking activities are all heating up, and ecosystem activity is recovering.

This is not just numerical growth but a re-engagement of ecosystem attention. When transaction volumes continue to grow, it usually indicates increasing real demand for on-chain applications.

Dominance of Altcoin Trading Volume

Latest data shows that altcoins now account for 50% of total cryptocurrency trading volume, surpassing Bitcoin (27%) and Ethereum (23%). While this data may seem unfavorable for ETH, the reverse is also true—when the altcoin season kicks off, Ethereum, as the largest altcoin platform, often benefits the most.

Improved Regulatory Environment

Although no specific data is provided in the news, the mention of “improved regulatory environment” is significant. This generally indicates that policy uncertainty is decreasing and barriers for institutional investors are lowering.

Expectations for Protocol Layer Upgrades

Upgrades to protocols like Fusaka, Glamsterdam, and the ongoing expansion of Layer 2 solutions are laying the foundation for Ethereum’s evolution into an “AI and smart contract settlement layer.” These are not short-term hype but genuine ecosystem developments.

Market Expectations Still Require Caution

It should be noted that the market remains cautious about a full-blown “altcoin season.” Prediction platforms indicate that the probability of a large altcoin rally before April 2026 is less than 20%. This suggests that while signals are visible, consensus is not yet strong enough.

ETH’s annual return has slightly outperformed Bitcoin, but this is far from a “breakthrough.” Whether it can sustain excess performance into 2026 still depends on the coordination of macro liquidity and regulatory implementation. Both factors are outside the control of the crypto market.

Summary

Ethereum’s story of catching up with Bitcoin is essentially a story of capital rotation. The 160% versus 457% increase reflects Bitcoin’s dominant position over the past few years. But as Bitcoin’s market share begins to decline, ETH/BTC rises, on-chain fundamentals improve, and enterprise treasuries continue to expand, this gap has the potential to narrow.

The key point is that this is not a guaranteed reversal but a window for structural recovery. While the five major catalytic factors are indeed stacking up, whether this ultimately evolves into sustained excess returns depends on macroeconomic conditions aligning. For investors, this is a signal worth关注 but one that requires cautious monitoring.