Ethereum's Transaction Volume Surge: A Case for Outperforming Bitcoin in the 2025–2026 Bull Cycle

In July 2025, Ethereum achieved a historic milestone when its weekly spot trading volume ($25.7 billion) surpassed Bitcoin's ($24.4 billion) for the first time in over a year, according to Bitcoin vs Ethereum statistics. This shift, long anticipated by proponents of the "flippening" narrative, underscores Ethereum's growing dominance in on-chain activity and institutional adoption. As the crypto market enters a new bull cycle, Ethereum's unique value proposition-rooted in scalability, DeFi innovation, and macroeconomic tailwinds-positions it to outperform Bitcoin in the coming 12–18 months.

Layer 2 Scaling: The Engine of Ethereum's Growth

Ethereum's ability to outperform Bitcoin in transaction volume is largely attributable to its Layer 2 (L2) ecosystem. By 2025, L2 solutions such as Arbitrum, Optimism, and zkSync had processed 63% of Ethereum's total transactions, reducing base fees and enabling cost-effective use cases like stablecoin settlements and NFT minting (CoinLaw data). For instance, Arbitrum's TVL reached $19 billion in 2025, while its daily throughput averaged 4,000–5,500 transactions per second (TPS), as noted in a review of top Layer 2 solutions. These advancements, coupled with the Pectra upgrade's introduction of smart accounts and alternative fee tokens, have transformed Ethereum into a more accessible platform for both retail and institutional users, according to an Ethereum 2025 development analysis.

In contrast, Bitcoin's reliance on its base layer has limited its scalability. While Bitcoin's block size and confirmation times remain optimized for store-of-value use cases, its inability to support complex smart contracts or high-frequency transactions has left it lagging in on-chain utility, a point emphasized in Bitcoin vs Ethereum 2025–2026. This structural asymmetry is critical: Ethereum's L2 networks now handle more transactions daily than Bitcoin's entire blockchain, as highlighted in an Altcoins lead Q3 2025 analysis.

Institutional Adoption and Real-World Utility

Ethereum's institutional adoption has accelerated in 2025, driven by its role in tokenizing real-world assets (RWAs) and facilitating decentralized finance (DeFi). Major financial institutions have launched Ethereum-based tokenized funds and ETFs, leveraging L2 solutions to reduce costs and improve liquidity (CoinLaw data). For example, Ethereum's dominance in stablecoin settlements-accounting for 78% of all stablecoin transfers in 2025-was documented by TradingKey.

Meanwhile, Bitcoin's institutional appeal remains tied to its narrative as "digital gold." While U.S. spot Bitcoin ETFs have driven record inflows - $332 million in September 2025, per a Shine Magazine piece - Bitcoin's utility is constrained by its lack of programmability. Ethereum, by contrast, has attracted capital through its expanding ecosystem of tokenized equities, real estate, and carbon credits, according to an Ethereum Layer-2 scaling analysis. This diversification of use cases creates a flywheel effect: increased on-chain activity drives network value, which in turn attracts more developers and capital.

Macroeconomic Tailwinds and the Next Bull Cycle

The 2025–2026 bull cycle is being fueled by macroeconomic factors that favor Ethereum's growth. As central banks ease monetary policy and cut interest rates, risk-on assets-including crypto-are poised to outperform. Ethereum's shrinking supply (due to burning mechanisms in EIP-1559 and L2 airdrops) has created scarcity, with its annual issuance dropping to 0.3% in 2025, according to a Coinpedia outlook. This deflationary pressure, combined with rising demand from DeFi and RWAs, could drive Ethereum's price to $8,000–$10,000 by mid-2026, as projected in an Analytics Insight forecast.

Bitcoin, while benefiting from macroeconomic tailwinds, faces headwinds in its next phase. Its 2024 halving event and ETF approvals have already priced in much of its upside, with forecasts pegging its 2026 target at $160,000–$250,000 per the Fidelity outlook. However, Bitcoin's role as a macroeconomic hedge may limit its volatility-adjusted returns compared to Ethereum's dynamic ecosystem.

Conclusion: Ethereum's Path to Outperformance

Ethereum's outperformance over Bitcoin in the next bull cycle is not merely speculative-it is underpinned by concrete metrics. Its L2 scaling solutions have unlocked unprecedented transaction throughput, while institutional adoption and RWA tokenization have diversified its value proposition. As macroeconomic conditions favor risk assets and regulatory clarity improves, Ethereum's unique blend of utility, scalability, and scarcity makes it a compelling long-term investment.

For investors, the key takeaway is clear: while Bitcoin remains the dominant store of value, Ethereum's infrastructure-driven growth story offers higher upside potential in a market increasingly defined by innovation and utility.