After hitting multi-year lows in recent weeks, an analyst at UK bank Standard Chartered expects the Ethereum price to continue its "structural decline" by the end of the year. SC has lowered its price forecast for 2025 from $10,000 to $400.
Geoff Kendrick is the Global Head of Digital Assets Research for the company. He expects that the ETH/BTC rate, which hit historic lows recently, will slowly decrease until 2027.
It means even if Ethereum He wrote in an updated market note that was shared with Decrypt.
Kendrick blamed the relative decline of its dominance on the rise of Ethereum’s Layer-2 networks, citing Coinbase Base as the primary example.
A Layer-2, or off-chain network, is built over a blockchain in order to enhance its capabilities. Other Ethereum Layer-2s, aside from Base, include Arbitrum Optimism zkSync Era Polygon ZkEVM.
Base is estimated to have removed $50 billion in market capitalization from ETH. Kendrick claims that this is due to the fact that when people use these L2s rather than the Ethereum original network, the fee goes to other organizations (such as Coinbase) and reduces the amount of fees the Ethereum Foundation receives.
Kendrick argued that these lower fees directly impact the price of ETH, as it lowers the "GDP" of the Ethereum blockchain and the amount of gas fees it collects from transactions, meaning the Foundation mints more new coins to pay expenses.
The analyst did posit that a proactive "change of commercial direction from the Ethereum Foundation – such as taxing Layer-2s" could mitigate these issues and improve its market share, but said they think this is "unlikely."
BASE could have been a highly profitable project for Coinbase. Coin Metrics, which estimates Base’s profit at approximately $7.417 million (roughly 24 million dollars) during the fourth quarter of 2024.
Kendrick outlined other avenues through which ETH can maintain market dominance. He cited, for instance, the sudden rise in popularity of tokenized real world assets (which commonly utilize Ethereum). The analyst feels ETH’s security credentials will maintain its popularity in this area but stated, "this is no longer a sound basis for our medium-term views."
Ethereum Pectra Upgrade Is Coming
The gloomy predictions from some analysts come as the Ethereum community is preparing for Pectra, its biggest update since 2022’s "The Merge." The introduction of Pectra could result in significant improvements to ETH staking. Current limits will be dramatically raised, and gas fees can also now be paid in cryptocurrencies other that ETH.
Even though there were a few technical glitches when testing, the update could reach the mainnet by April 25. The developers plan to release a final testing network, Hoodi later in the month.
CoinGecko’s data shows that ETH was up by 1.3% during the last 24-hours. The price is down by 29.6% over the past month and 46.7% so far this year.
Stacy Elliott edited this article.
