A new report from Standard Chartered (SC) presents a not-so-positive prediction for Ethereum's price in 2025. According to Geoff Kendrick, Head of Digital Asset Research at the British bank, Ethereum is in a "structural decline" trend and may continue to lose value compared to Bitcoin.
📉 Latest prediction: SC has lowered the target price of $ETH from $10,000 to $4,000 by the end of this year.
📉 ETH has dropped significantly: Since the beginning of the year, ETH has lost 46.7% of its value and decreased by 29.6% in the past month.
What is causing SC to be pessimistic about Ethereum's future? Can the upcoming Pectra upgrade reverse the situation?
Why is Ethereum losing its position?
Geoff Kendrick believes the main reason Ethereum is weakening is the strong development of Layer-2 (L2) solutions.
📌 What is L2? These are scaling networks operating on Ethereum to reduce transaction fees and increase processing speed. Some popular L2s:
✅ Base (Coinbase)
✅ Arbitrum ($ARB )
✅ Optimism ($OP )
✅ zkSync Era
✅ Polygon zkEVM
Among these, Base has the strongest impact on ETH. Kendrick estimates that Base has taken away $50 billion from Ethereum's market capitalization.
⛽ Reason: When users transact on L2s like Base instead of native Ethereum, the transaction fees do not flow to the Ethereum Foundation, but to other organizations like Coinbase. This reduces Ethereum's revenue, forcing the platform to issue more ETH to compensate, creating downward price pressure.
➡️ Result: ETH can still increase in price according to the overall trend, but it will lag behind Bitcoin and is at risk of gradually losing its dominant position in the long term.
Does Ethereum have a solution?
Kendrick believes #Ethereum could improve the situation if the Ethereum Foundation changes its commercial strategy, such as:
✅ Taxing Layer-2 to collect fees from transactions on these networks.
✅ Promoting digital assets (tokenized real-world assets - RWA) to increase demand for Ethereum.
However, he does not believe the Ethereum Foundation will implement these changes, making ETH's recovery more difficult.
Furthermore, although some areas like digital assets on the blockchain still use Ethereum, Kendrick believes this is no longer enough to maintain ETH's position in the medium term.
The Pectra Upgrade – Will It Help Ethereum Recover?
Despite the negative forecast from Standard Chartered, the Ethereum community is eagerly awaiting the Pectra upgrade, expected to launch in April 2025.
📌 What's new with Pectra?
✅ Increasing the ETH staking limit, helping to improve yields for investors.
✅ Allowing gas payments with tokens other than ETH, expanding network utility.
However, this upgrade has faced some technical issues during testing, causing concern about its success when deployed on the mainnet.
In conclusion: What is the future of Ethereum?
🔴 Negative factors:
❌ Layer-2 solutions like Base are reducing the demand for native Ethereum.
❌ The Ethereum Foundation has no plans to change its fee strategy.
❌ ETH is gradually losing its position compared to Bitcoin and is struggling to reach the expected high price.
🟢 Positive factors:
✅ The upgrade #pectra could help improve the experience and demand for ETH.
✅ If tokenization of traditional assets (RWA) develops strongly, Ethereum still has a chance to recover.
With the new forecast from $10,000 down to $4,000, investors need to closely monitor the factors affecting ETH's price in the coming time. Can Ethereum reverse the trend and regain its position against Bitcoin? The answer will depend on how this ecosystem responds to current challenges.