zycrypto.com
After slumping to multi-year lows in recent weeks, Standard Chartered expects the Ether price to continue its “structural decline” by the end of the year. As such, the UK investment bank has revised down its 2025 price target to $4,000 from $10,000.
Layer 2 Blockchains Are Reducing Ether Dominance
Despite being the second-largest crypto by market cap and holding the dominant spot as the decentralized finance leader, Standard Chartered believes Ethereum’s price prospects remain grim in the short term.
In a March 17 client letter, Geoff Kendrick, the bank’s Global Head of Digital Assets Research, sharply lowered his end of 2025 ETH price estimate to $4,000 from $10,000, representing a massive 60% reduction.
Kendrick primarily blamed the rise of Ethereum Layer-2 networks as part of the reason for its relative dominance slipping away, using crypto exchange giant Coinbase’s Base blockchain as an example.
“Layer 2s, and Base in particular, now extract super-profits from the Ethereum ecosystem. We estimate that Base (the dominant Layer 2) has removed $50 billion of market cap from Ethereum alone.”
Kendrick explains that when users make transactions on these L2s instead of the original Ethereum network, the transaction fees bypass the Ethereum Foundation and instead go to companies like Coinbase.
The pundit suggested that these reduced fees directly affect the ETH price, as it lowers the “GDP” of the Ethereum blockchain and the amount of gas fees it accrues from transactions, meaning the Foundation has to mint more new coins to pay expenses.
Possible Measures
Multiple factors could be involved in ETH’s regaining its lost glory. According to Standard Chartered, the growing popularity of tokenized real-world assets (RWAs), where Ethereum maintains an 80% market share, could increase demand for the network.
Moreover, the highly-anticipated Pectra upgrade, which is the Ether network’s largest update since 2022’s “The Merge”, might boost scalability and fee dynamics. Despite encountering some technical issues here and there, developers plan to deploy a final testnet, Hoodi, later this month. If all goes to plan, Pectra could launch on the mainnet by April 25.
Kendrick also argued that taxing layer 2s could help mitigate lingering issues and improve Ether’s market share. “Unless that happens, ETH-BTC will keep going down,” he warned.
Still, he thinks taxation is unlikely, leaving Ethereum’s long-term trajectory uncertain.
What Lies Ahead
Despite lowering its near-term outlook, Kendrick still feels that Ethereum will surge over time, envisioning a price of $7,500 by 2028-2029.
Nonetheless, without implementing major economic reforms that benefit ETH’s market positioning, the banking executive reckons that the asset will continue lagging behind Bitcoin.
Kendrick said he expects the ETH/BTC ratio to fall to 0.015 by year-end 2027, the lowest level since 2017.