Ethereum vs Bitcoin: Is the Q1 Trend Shifting in Favor of ETH?

Recent market trends have shown increased investor appetite, largely driven by memecoins. However, Ethereum (ETH) is displaying a unique pattern that may indicate a shift in favor of ETH over Bitcoin (BTC). With rising on-chain activity and a notable supply shock, the dynamics between these two cryptocurrencies could be changing as we move into 2026.

Key Takeaways

Strong demand for memecoins is fueling market momentum.
Ethereum’s recent staking activity suggests a potential supply shock.
ETH has outperformed BTC with a 9.3% price increase in just one week.
A significant shift in supply dynamics could favor ETH over BTC in Q1 2026.

Ethereum [ETH]

Market Momentum Driven by Memecoins

Investors are currently demonstrating a heightened risk appetite in the market. Memecoins are particularly leading this momentum, with top-tier memecoins witnessing impressive double-digit percentage gains weekly. Atfirst glance, this seems to hint at speculation being the main driver behind these trends. However, when we focus on Ethereum (ETH), this narrative diminishes considerably.

Ethereum's Strong On-Chain Metrics

Recent on-chain data suggests a supply shock is underway for ETH. For example, BitMine has staked 771,000 ETH over the last two weeks. This indicates a shift in capital from speculative assets to more conviction-driven investments. As a result, ETH has outperformed BTC by a factor of two, with a 9.3% price increase just one week into the new year.

This performance marks a considerable divergence in quarterly trends, especially when considering that since 2022, Bitcoin has a history of outperforming Ethereum during the first quarter, enjoying stronger rallies and less severe pullbacks. However, with an apparent supply crisis developing in Ethereum, could 2026 see a break in this pattern?

Ethereum's Roadmap and Institutional Growth

Looking ahead, Ethereum's plans for 2026 center heavily on development. The network is focusing on real-world asset (RWA) tokenizations and DeFi applications, strengthening its presence among institutional players and enhancing its layer 1 (L1) competitiveness. The groundwork laid in 2025 has set the stage for increased adoption and institutional engagement in the upcoming year.

Evidence of these developments can be seen in Ethereum's on-chain metrics. As of now, 1.32 million ETH is pending staking, with only 3,000 ETH waiting to be withdrawn. This notable shift, where entries now surpass withdrawals for the first time in six months, further supports the notion of a tightening supply.

ETH

Potential Price Movements for ETH and BTC

Given this context, the ETH/BTC pair has experienced nearly a 4% increase so far, suggesting that this isn't just a temporary spike. Instead, it may indicate the beginning of a larger upward trend. With tightening supply, robust fundamentals, and an expanding L1 ecosystem, investor confidence in Ethereum appears to be solidifying.

Conclusion

This unique sentiment sets the stage for a notable 2026 divergence in performance between ETH and BTC. With ETH's recent performance showing a move twice as large as BTC's, if this momentum is sustained, we could see a pivotal moment where ETH outperforms BTC in returns by the end of the first quarter of 2026.