Catenaa, Tuesday, March 18, 2025-Standard Chartered has sharply reduced its 2025 price target for ether, cutting its previous forecast from $10,000 to $4,000, citing the growing dominance of Ethereum’s Layer 2 networks, particularly Base.
Geoffrey Kendrick, the bank’s global head of digital assets research, said Base’s rise has significantly eroded Ethereum’s market cap, estimating a $50 billion reduction.
“Layer 2s, and Base in particular, now extract super-profits from the Ethereum ecosystem,” Kendrick stated in his report, Ethereum – Midlife Crisis.
Ethereum’s shift toward Layer 2 solutions has diverted transaction fees away from the main chain, effectively commoditizing its Layer 1 framework, according to Kendrick.
He suggested a potential remedy would be imposing a tax on Layer 2 networks’ excess profits, akin to government levies on foreign-owned mining firms. However, he acknowledged such a move is unlikely.
Ether is currently trading at around $1,900, down over 60% from its 2021 all-time high of nearly $4,900. Kendrick attributed Ethereum’s struggles to structural changes, including The Merge and the introduction of Layer 2 scaling solutions.
Despite the lowered target, Standard Chartered maintains a longer-term bullish outlook, projecting ether to reach $7,500 by 2028-2029.
However, Kendrick expects Ethereum to continue underperforming bitcoin, forecasting the ETH/BTC ratio to fall to 0.015 by 2027, its lowest level since 2017.
Base, backed by Coinbase, defended its role, asserting it enhances Ethereum’s accessibility and growth. While Ethereum still leads in decentralized finance and tokenized assets, its dominance has waned.
