With Bitcoin (BTC 0.60%) down 47% from its all-time high of $126,000 just a few months ago, it's perhaps no surprise that crypto investors are starting to look elsewhere for opportunities.
For some investors, it means hunting for undervalued cryptocurrencies with the potential to outperform Bitcoin this year. One of those beaten-down cryptos is Ethereum (ETH 0.40%), which has historically played second fiddle to Bitcoin. But is that still the case in 2026?
Harvard's shift from Bitcoin to Ethereum
The high-profile example that has investors buzzing is the recent decision by Harvard's $50 billion endowment fund to trim its exposure to Bitcoin and replace it with a brand-new position in Ethereum.
According to recent 13F filings with the SEC, Harvard Management Company now owns 5.35 million shares of the iShares Bitcoin Trust (IBIT 0.65%), with a reported market value of $265.8 million. That's down 21% from its previously reported position of 6.81 million shares.
Moreover, Harvard reported that it now owns 3.87 million shares of the iShares Ethereum Trust (ETHA 0.57%), worth approximately $86.8 million. This is the first time that Harvard's endowment has owned Ethereum.
Image source: Getty Images.
There are several different ways to interpret this move by Harvard Management Company. It could simply be a decision to diversify away from Bitcoin. The days of single-asset crypto exposure could be over, as institutional investors hunt for broader exposure to the crypto economy. With an expanding array of crypto ETFs now available for trading, it's getting easier to gain exposure to other cryptocurrencies.
Or it could simply be a relative value play. Bitcoin is down 25% this year, while Ethereum is down 35%. Bitcoin is down 47% from its all-time high of last year, while Ethereum is down a whopping 61%. So Ethereum appears to be getting hit much worse than Bitcoin. It could be oversold right now, making it attractive to crypto bargain-hunters.
Could Ethereum really outperform Bitcoin this year?
There are a few reasons why Ethereum could outperform Bitcoin this year. One of them has to do with its ability to offer "staking yield." Simply put, investors can earn additional passive income by staking their Ethereum. In contrast, Bitcoin is a proof-of-work blockchain, and does not directly offer staking yield.
CRYPTO: ETH
Key Data Points
Until recently, Ethereum ETFs could not provide this additional staking yield due to regulatory concerns. If you wanted to stake your Ethereum, you needed to buy it directly on a cryptocurrency exchange and stake it yourself. This left many institutional investors out in the cold.
However, given the pro-crypto regulatory approach of the Trump administration, this may no longer be a problem going forward. BlackRock (BLK 2.59%), the issuer of the iShares Ethereum Trust, is already planning for an influx of new money from institutional investors hunting for this additional staking yield. All that's needed is a green light from regulatory authorities.
For now, Ethereum does look like a more compelling investment than Bitcoin. Once hailed as "digital gold," Bitcoin has failed to be the store of value that everyone hoped it would be. You can't call yourself a store of value and shed 47% of your value in a matter of months.
