- Increased Layer-2 activity reduces fee revenue and on-chain activity, impacting Ethereum’s economic model.
- Standard Chartered’s downward revision reflects concerns over Ethereum’s future growth amid evolving market conditions.
According to a previous CNF post, Ethereum (ETH) was in danger of losing its dominance over XRP. However, Standard Chartered, a prominent global bank, has significantly revised its Ethereum (ETH) price forecast for 2025, slashing it by 60% from $10,000 to $4,000. Again, is ETH price in danger?
This substantial downgrade raises concerns about Ethereum’s future performance and prompts an examination of the factors influencing this decision.
Standard Chartered has just lowered its end-of-year price target for Ethereum to $4,000 from $10,000 — a 60% decrease. Wall Street is learning quicker than I thought that Bitcoin is king.
Standard Chartered has just lowered it's end of year price target for Ethereum to $4,000 from $10,000.
60% down.
Wall Street is learning quicker than I thought that Bitcoin is King.
— BRITISH HODL
(@BritishHodl) March 17, 2025
Layer-2 Solutions: A Double-Edged Sword
Initially designed to enhance Ethereum’s scalability, Layer-2 solutions like Base have inadvertently diverted value from Ethereum’s main network. Standard Chartered estimates that Base alone has siphoned approximately $50 billion from Ethereum’s market capitalization, as shared in a tweet by British Hodl.
These Layer-2 platforms process transactions off-chain, reducing congestion but also diminishing the fees and activity on Ethereum’s primary blockchain.
Declining Fee Revenue and Increased Net Issuance
The migration of transactions to Layer-2 networks has led to a notable decrease in fee revenue for Ethereum. Lower on-chain activity translates to reduced income for validators and miners, impacting the overall economic model of the Ethereum ecosystem.
Additionally, a higher net issuance of ETH tokens contributes to supply pressures, further influencing price dynamics and market movements.
Analysts’ Perspectives: Caution Ahead
Market analysts advise caution regarding Ethereum’s short-term prospects. The absence of clear bottoming formations in ETH’s price charts suggests potential for further declines.
Trading Ethereum under current conditions has been likened to “catching a falling knife,” indicating the risks associated with attempting to time the market amidst ongoing volatility.
Current Market Performance and Navigating Uncertainty
Back in 2024, as CNF highlighted, Ethereum’s price was at risk after TRON’s Justin Sun sold 50% of his ETH holdings. As of now, Ethereum is trading at approximately $1,900.61, reflecting a marginal increase of 0.20% in the past 24 hours and 0.46% in the past week.
The intraday trading range has seen highs of $1,950.34 and lows of $1,881.70, underscoring the cryptocurrency’s recent volatility.
As for lesson learned, the revised forecast by Standard Chartered underscores the challenges Ethereum faces in maintaining its market position amidst evolving technological and economic landscapes.
Investors and stakeholders are advised to monitor these developments closely, as the interplay between Layer-2 solutions and Ethereum’s core network will likely continue to shape the cryptocurrency’s trajectory in the coming years.
