Standard Chartered analyst believes Coinbase has “proactively” sold 12,652 cryptos. Ethereum (approximately $35 million) in Q4 of 2024. The company explained that Coinbase’s layer-2 base network drives Ethereum demand, but its profit-taking is damaging the price of the blockchain.
Standard Chartered lowered its price forecast for Ethereum to $4000 by 2025, down from the original $10,000. At the time, Geoff Kendrick, Global Head of Digital Assets Research at the bank, claimed that layer-2 network Base had removed $50 billion from ETH’s market cap—now, he’s saying this is because of profit taking.
Kendrick’s view was that “increased activity on Base” increases the demand for ETH. Decrypt. “But then, all Base’s profit (which is around 80% of Base revenue) will be sold (ETH to USD selling), to repatriate the profits to Coinbase.”
Kendrick subtracted the quarterly Ethereum holdings of Coinbase for operations and investments from Base’s profits to support his claims.
He explained: “This shows me that Coinbase actively sold 12,652 Ethereum in Q4 of 2024,” he said. Over the three quarters, the net proactive sales was 1,558ETH. While there have only been 3 quarters since Dencun, we think that it is safe to conclude that Coinbase does not HODL Base’s ETH profit.”
If we take the Q4 average, and use the open and closing dates of the quarter, it comes out at approximately $37.68 Million sold by Coinbase.
Ethereum's Decun upgrade went live in March of last year and significantly reduced the gas fees on layer-2 networks. Analyst believes that Coinbase is selling as part of “normal decision-making process” since March last year.
Coinbase spokesperson told Decrypt that Base, "earns ETH from sequencer fees, and the ETH we earn is primarily held for long term investment or used for operational expenses, including tax liabilities and reinvesting in growth via things like salaries, grants, acquisitions, and public goods funding."
They added that, "Separately, we also hold some ETH for long-term investment, and Coinbase reports our crypto assets specifically held for long -erm investment as part of our public quarterly earnings filing." Citing the firm's 10K, the spokesperson noted that, "crypto assets held for investment are primarily held long term…we do not engage in regular trading of these assets but may lend them through Prime Financing or stake them," adding that, "Our ETH held for investment grew 20% over the course of 2024."
Standard Chartered’s analyst wrote earlier this week that layer-2 network transactions negatively impact the underlying blockchain, because Ethereum gets less fees in total. This lowers both the GDP of the Ethereum Blockchain and the gas fees that it receives for transactions. The Foundation then mints new coins in order to cover expenses.
Base was created by Coinbase and is built as a layer-2 on Ethereum. It aims at extending the abilities of the underlying Blockchain, while also offering a way to get off the popular exchange.
Standard Chartered’s analyst thinks that Coinbase’s Ethereum holdings in the last three quarters reveal even more information about their goals.
Kendrick said, “The fact that they net-bought in Q3 and then net-sold in Q4 when the average price was higher tells me Coinbase behaves like any profit maximising risk adjuster.”
Data from CoinGecko shows that despite Standard Chartered cutting its target price, Ethereum is still up by 5.6% for the day, and 4.6% over the past week. Bitcoin The price of the stock has remained largely flat over this period.
As a result, over 70% of users on decentralized prediction market MYRIAD—launched by Decrypt‘s parent company DASTAN—believe that Ethereum’s relative price to Bitcoin will be above $0.023 by the end of the week.
Coinbase has provided comments on this article.
