Could ETH Outperform BTC This Cycle?

The crypto market has always been a battleground of narratives and weird tribalism. Each token represents a weird little faction of the internet, and every token you’re not holding is cheap garbage. But yours? Well, yours is sacred, obviously! Although, while we’re on the topic of tribalism, spend a moment lurking in the subreddit of a crypto you aren’t holding, the conversations are all exactly the same across the board.

Anyway!

Of these big tribalist battles, one of the biggest is between BTC and ETH. For a lot of different reasons but, them being the oldest, original two is a big part of why. Within this ideological battle is the hotly debated ‘Flippening’ - the hypothetical moment when Ethereum surpasses Bitcoin in market cap. For years, it’s been a distant dream for ETH maxis, but with Bitcoin’s dominance hovering near 65% and ETH’s long-awaited Pectra upgrade now live, the question is more relevant than ever: Could this be the cycle where Ethereum steals Bitcoin’s spotlight - and delivers bigger gains?

Let’s start with the most recent elephant to walk into the room: Pectra. Pectra isn’t just another upgrade - it’s a UX revolution. While Bitcoin’s development moves at a glacial pace, Ethereum is iterating at breakneck speed, and Pectra might be the catalyst that finally closes the gap. But the Pectra upgrade alone isn’t going to cut it. There are however, quite a few things in ETH’s favor here!

1. Scalability That Actually Matters

Bitcoin’s scalability solution? Layer 2s (mostly). Ethereum’s? A multi-pronged attack - rollups, blobs, and now Pectra’s optimizations. The upgrade’s enhanced data handling means more transactions at lower costs, especially during peak demand. For users, that translates to cheaper gas fees (no more $50 NFT mints). For DeFi, it means protocols can scale without migrating to Solana or Cosmos.

And what’s even better is that cheaper fees attract more users, obviously! And more users mean more demand for ETH, not just as gas, but as the backbone of an ecosystem that’s finally smooth enough for mainstream adoption.

2. Gas Paid in Anything (The Silent ETH Burner)

Pectra’s smart wallet features let users pay gas in any token (USDC, meme coins, you name it). At first glance, this seems like a small UX win. But every gas payment in a non-ETH token still burns ETH behind the scenes (the protocol converts the token to ETH to settle the transaction).

This creates a systematic, compounding buy pressure for ETH - similar to EIP-1559’s burn mechanism but amplified. Less supply, plus steady demand, equals textbook bullish setup.

3. DeFi’s Making a Comeback

"Ethereum DeFi is dead" has been a popular meme since Solana’s rise. But new projects like Obol Network (a Lido competitor with distributed validator tech) are emerging, and they’re not just clones, they’re genuine evolutions. Obol’s DVT-based staking makes Ethereum’s PoS more resilient, addressing one of the biggest critiques of post-Merge ETH.

Meanwhile, Pectra’s staking upgrades (higher validator caps and faster deposits) remove friction for institutional players. If Bitcoin is "digital gold," Ethereum is becoming digital infrastructure, and institutions love infrastructure.

Of course, betting against Bitcoin is usually a pretty stupid, pretty naive idea. It is the king of crypto for a reason, and being the king, it has three unshakable advantages:

1. Brand Dominance: Bitcoin is synonymous with crypto. Retail investors, corporations, and even governments treat it as the reserve asset.
   

2. Scarcity Narrative: The halving just passed, and ETFs are sucking up supply. Bitcoin’s "hard money" story is stronger than ever.

3. Simplicity: Bitcoin does one thing, and it does it well. Ethereum’s complexity is a strength, but also a barrier.

That being said, Bitcoin’s strengths are also its limitations. Its monetary policy is perfect, but its utility is static. ETH, meanwhile, is a financial operating system, and Pectra proves it’s still iterating aggressively.

But where exactly is the money going to go? Well, crypto markets move in cycles, and capital rotates. Right now, Bitcoin is eating ETF inflows, but history shows that after BTC runs, altcoins, and especially ETH, catch up.

2017: BTC ran first, then ETH exploded 100x.

2021: BTC peaked in April, ETH followed in November.

2024: BTC hit ATHs pre-halving. If the pattern holds, ETH’s turn is coming

With Pectra live, DeFi evolving, and ETH still 30% below its ATH (while BTC has surpassed its own), the risk-reward looks enticing.