Strategy's decision to sell 32 Bitcoin for $2.5 million last week may have been immaterial in dollar terms, but Standard Chartered's head of digital asset research Geoffrey Kendrick believes it signals something far more significant: the beginning of a structural shift in which Ethereum outperforms Bitcoin by more than 40% from current levels."I see Monday as being the start of ETH outperformance versus BTC," Kendrick wrote in a note to clients — pointing to Ether's notable relative strength on the day of the Strategy sale announcement, even as crypto prices broadly declined. Since Monday, ETH has appreciated 5% relative to BTC, with the move ranking among the largest ETH-versus-BTC gains on a Bitcoin down day since the start of 2024.The ETH/BTC ratio target: 0.04 by year-endKendrick's specific call is for the ETH/BTC ratio to climb from around 0.028 currently to 0.04 by the end of 2026 — an implied Ethereum outperformance of more than 40% against Bitcoin regardless of whether both assets move higher or lower in absolute terms. His long-term ETH price targets remain $4,000 by year-end 2026 and $40,000 by 2030.The ratio has been in a prolonged downtrend since September 2022, when Ethereum completed its transition from proof-of-work to proof-of-stake. Over that period, ETH depreciated 66% versus BTC, hitting a five-year low in April 2025. The trend has since shown signs of reversing — ETH has bounced more than 60% from those lows over the past year — and Kendrick sees Strategy's sale as the catalyst that accelerates that recovery.Why the sale matters: staking versus no stakingKendrick's argument is not primarily about price momentum. It is about the fundamental economics of Bitcoin versus Ethereum treasury companies — and what those economics mean for how each asset class behaves under financial pressure.Bitcoin does not generate yield. Strategy and other Bitcoin treasury firms rely entirely on Bitcoin price appreciation and capital markets activity — equity issuance, convertible note sales, and ATM programs — to fund operations and meet obligations. When capital markets tighten or Bitcoin prices fall, the only remaining lever is asset sales. Strategy's 32 BTC sale to fund STRC preferred stock distributions is the first public evidence of that pressure manifesting in actual disposals.Ethereum, by contrast, can be staked to earn yield — currently approximately 3% annualized. That yield creates a self-funding mechanism that allows Ethereum treasury companies to cover operating costs and generate recurring revenue without needing to liquidate holdings.The practical illustration is Tom Lee's Bitmine, the largest Ethereum treasury company. Despite amassing an $11 billion ETH position without issuing any debt, Bitmine's staking operations generate approximately $258 million in annualized revenue through its MAVAN staking platform, with projected rewards approaching $300 million annually. That programmatic cash flow represents a fundamentally different business model than Strategy's — one that does not require selling the underlying asset to fund distributions.Valuation gap set to closeEthereum treasury companies including Bitmine and SharpLink Gaming currently trade at lower premiums to net asset value than Strategy. Kendrick argued that investors will increasingly reward the staking income model as its advantages become more visible — narrowing the valuation gap between Ethereum and Bitcoin treasury firms over time.The argument is structural rather than cyclical. In a higher-for-longer interest rate environment where capital markets access is more expensive and investor scrutiny of dilutive equity issuance has intensified, the ability to generate 3% annual yield from staking without selling assets or issuing shares becomes a meaningful competitive advantage. Galaxy Digital has separately argued that the raise-and-hold era for digital asset treasury companies is over — and the staking-capable firms are better positioned for what comes next.The broader ETH recovery thesisKendrick's call builds on a thesis he has maintained throughout 2026. Earlier this year, he cited the CLARITY Act's advancement as a catalyst for Ethereum specifically — arguing that regulatory clarity for DeFi and digital asset infrastructure would disproportionately benefit ETH given Ethereum's dominant position in both sectors. The network currently holds more than 60% of tokenized real-world asset market share when layer-2 networks are included, and major institutional players including BlackRock and JPMorgan have recently launched tokenized funds on Ethereum.The near-term picture for ETH remains challenged — the asset broke below $2,000 for the first time since March, futures open interest hit a record 16.39 million ETH worth $32.5 billion as shorts piled in, and ETF outflows ran for 14 consecutive sessions. But Kendrick's argument is that these near-term headwinds are creating the entry point for the structural rerating he is projecting — one where staking yield, institutional tokenization momentum, and the comparative disadvantage of yield-free Bitcoin treasuries combine to drive Ethereum's relative performance significantly higher by year-end.
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