Tom Lee: Bitcoin on Track to Reach New All-Time High This Year, Ethereum Will Outperform Bitcoin

Bitcoin edged closer to the $94,700 resistance level earlier this week, with analysts debating whether the move signals a trend reversal or a short-term rebalancing in the market according to TradingView analysis. While a breakthrough above this level could push BTC toward $100,000, some experts warn of a potential decline if the resistance remains unbroken. The market is closely watching Bitcoin's behavior near $94,555, a price level identified by trader Ali Martinez as a critical trigger for further bullish momentum.

Ethereum has emerged as a primary beneficiary of shifting investor attention from Bitcoin. The ETH/BTC ratio has risen 3.59% year-to-date, according to market data, indicating growing interest in Ethereum relative to the leading cryptocurrency. Institutional demand for Ethereum has also increased, driven by its dominance in stablecoins, decentralized finance, and real-world assets. Analysts at Standard Chartered expect this trend to continue and predict Ethereum could outperform Bitcoin in 2026.

Network metrics support Ethereum's rising profile. The Ethereum network has seen a 6.8% increase in daily transactions in 2026, with a 31% spike since mid-December, reflecting growing adoption. These metrics align with Ethereum's roadmap for scaling improvements, including layer-two solutions and gas limit expansions. Analysts like Ignas from DeFi highlight these upgrades as a differentiator, especially as Ethereum prepares for potential quantum computing threats.

Why Did This Happen?

Bitcoin's dominance in the crypto market has declined since peaking near 66% in July 2025, signaling a diversification of investor interest into altcoins. Ethereum is one of the main beneficiaries of this shift. The drop in Bitcoin's dominance to 59.70% as of early January 2026 underscores a broader trend of capital rotation away from Bitcoin and into Ethereum.

The ETH/BTC ratio, a key indicator of Ethereum's relative strength, has risen significantly in 2026. Experts suggest this increase is driven by investors seeking higher beta exposure in the Ethereum ecosystem following the stabilization of Bitcoin ETF markets. While Ethereum's price has not matched Bitcoin's gains, it has shown resilience, particularly in terms of staking yields and institutional adoption.

How Did Markets React?

Recent price movements suggest Ethereum is forming a constructive chart structure. Trader Honey noted that ETH has broken a long-term diagonal downtrend and is now flirting with the 200-day moving average on the daily chart. A successful reclaim of this level could open the door to a move toward $3,600–$3,800 in the short term. This momentum is supported by Bitcoin's potential to test its weekly moving average near $101,000, which could create favorable conditions for Ethereum.

Market indicators such as the RSI and MACD are showing increasing bullish momentum for Ethereum. The RSI is at 65, indicating strong momentum without reaching overbought territory, while the MACD histogram is expanding and turning greener, signaling growing bullish bias. These on-chain signals suggest Ethereum may be entering a phase of sustained strength.

What Are Analysts Watching Next?

Bitcoin remains a key variable in the broader crypto market. Standard Chartered analyst Geoff Kendrick forecasts a $150,000 price target for Bitcoin in 2026, with potential for further gains in subsequent years. However, he also notes that Bitcoin's performance has weighed on the overall market and that the risk-reward ratio at current prices may not be attractive for all investors.

For Ethereum, analysts are looking for confirmation of a breakout above key resistance levels and sustained institutional buying. Standard Chartered has revised its 2026 target for Ethereum to $7,500, reflecting a more cautious outlook due to Bitcoin's underperformance. Longer-term targets, however, remain bullish, with a 2030 price forecast of $40,000. Institutional players and corporate treasury buyers like Bitmine Immersion Technologies are also expected to influence Ethereum's trajectory.

Regulatory developments, particularly the U.S. CLARITY Act, may play a significant role in shaping Ethereum's future. The bill, which aims to provide a clearer regulatory framework for digital assets, could unlock new opportunities for decentralized finance and tokenized real-world assets. If passed in Q1, as anticipated, the Act could act as a catalyst for both Ethereum and Bitcoin.

Investor sentiment has also shifted toward Ethereum, particularly among traders who believe the asset is undervalued relative to its fundamentals. A growing number of market participants view Ethereum as a more compelling long-term investment, given its utility and roadmap for improvement. This sentiment is reflected in the price action and technical indicators, which suggest a potential continuation of the current bullish trend.