Standard Chartered Slashes Ethereum Price Target: A $6,000 Drop by 2025

Standard Chartered has significantly revised its price forecast for Ethereum, slashing its target for 2025 from $10,000 to just $4,000. This drastic change is attributed to the increasing dominance of Layer-2 networks, particularly Coinbase's Base, which has reportedly siphoned off substantial value from Ethereum's market capitalization.

Key Takeaways

• Standard Chartered reduces Ethereum's 2025 price target from $10,000 to $4,000.

• The decline is largely due to the rise of Layer-2 networks like Base, which are extracting value from Ethereum.

• The bank suggests that without intervention, Ethereum's underperformance relative to Bitcoin is likely to continue.

The Impact of Layer-2 Networks

The rise of Layer-2 solutions, especially Base, has been a significant factor in Ethereum's declining market position. According to analysts, Base has redirected approximately $50 billion away from Ethereum by retaining a large portion of transaction fees, which diminishes the revenue that Ethereum's mainnet receives.

• Base's Financial Impact:Estimated value drained from Ethereum: $50 billionPercentage of fees retained by Base: 80%

This trend has raised concerns about Ethereum's economic health, as more transaction activity and profits are occurring off the mainnet, leading to a decrease in Ethereum's overall market cap.

Ethereum's Structural Decline

Geoff Kendrick, the Global Head of Digital Assets Research at Standard Chartered, has pointed out that Ethereum's recent upgrades, including the transition to proof-of-stake and the upcoming Dencun update, have inadvertently contributed to this structural decline. While these upgrades were intended to enhance scalability and reduce fees, they have also allowed Layer-2 solutions to flourish at Ethereum's expense.

• Ethereum's Recent Upgrades:Transition to proof-of-stake (2022)Dencun update (2024)

These changes have commoditized Ethereum, enabling Layer-2 networks to dominate revenue generation, which has further weakened Ethereum's market position.

Future Projections and Recommendations

Standard Chartered's analysis predicts that Ethereum's price will continue to lag behind Bitcoin, with the ETH-BTC ratio expected to fall to 0.015 by 2027. This would mark Ethereum's lowest relative standing against Bitcoin since early 2017.

To counteract this trend, the bank suggests that the Ethereum Foundation should consider implementing a tax on Layer-2 networks that retain excessive profits without reinvesting in Ethereum's mainnet. This approach could help restore some balance and improve Ethereum's market share.

Conclusion

The outlook for Ethereum has taken a significant hit with Standard Chartered's revised price target. As Layer-2 networks continue to grow and extract value from Ethereum, the need for proactive measures becomes increasingly urgent. Without intervention, Ethereum's underperformance relative to Bitcoin may persist, raising questions about its future in the competitive cryptocurrency landscape.

Sources

• Standard Chartered Lowers Ethereum Price Target To $4,000: Here's Why A Coinbase Blockchain Is To Blame - Benzinga, Benzinga.

• Standard Chartered Lowers Its Ethereum Target for 2025 from $10,000 to $4,000: Here’s Why, The Crypto Basic.

• News Explorer — Standard Chartered Slashes Ethereum Price Target for 2025—Here's Why, Decrypt.

• Ethereum Price Will Continue 'Structural Decline' in 2025: Standard Chartered, Decrypt.

• Standard Chartered Slashes Ethereum Price Target for 2025, The Globe and Mail.