Key takeout
Standard Chartered reduced its ether year-end target to $4,000 due to a decrease in structure. Layer 2 blockchain contributes to a $50 billion reduction in the market capitalization of the ether.
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Standard Chartered predicted that Ethereum could reach $10,000 by the end of 2025 in a forecast made in January. Currently, banks have revised their year-end targets for digital assets, cutting them by 60%.
According to a report released today, the adjustments are based on Standard Chartered’s observation that Ethereum is facing an increase in competition from Layer 2 solutions. Furthermore, Dencun, a recent upgrade to Ethereum, does not help the network maintain market domination.
Standard Chartered said Ethereum still leads in many important blockchain metrics, but its advantages have declined over time.
Layer 2 blockchain was originally designed to support Ethereum by improving scalability and reducing transaction fees, moving its economic value away from Ethereum, the report says.
The base model, which shares profits with its owner, Coinbase, is considered a particularly effective competitive strategy. Standard chartered estimates show that Ethereum’s market capitalization will decline by $50 billion, and this downward trend will continue.
“The ether is at a crossroads,” the report said, “although it controls some metrics,” this domination is declining.
Despite the ongoing challenges, Standard Chartered views real-world assets tokenization as a potential growth driver for Ethereum.
According to the bank, Ethereum’s powerful security framework can maintain an 80% market share in this emerging sector, potentially stabilizing or overturning the decline in structure.
Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, suggests that “a positive change in commercial direction from the Ethereum Foundation” will help counteract the ongoing loss of value to these networks, like layer 2 solutions. However, he believes it is unlikely that EF will change its business model.
Standard Chartered forecasts to reduce the ETH/BTC ratio to 0.015 by the end of 2027, marking its lowest level since 2017.
Banks are hoping that ether prices will recover from current levels as the Bitcoin-driven rally lifts all digital assets is wider, but they claim that ether will continue to suffer performance.
Last year, Standard Chartered predicted that Ethereum would reach $8,000 by the end of this fiscal year and $14,000 by the end of 2025.
Bank analysts believed that the main catalyst for these price increases was the approval of the US Spot Ethereum ETF. They also viewed Dencon upgrades as another positive factor that contributed to Ethereum’s potential price growth.
Earlier this year, Standard Chartered predicted that Ethereum could reach $10,000 by the end of 2025 as a result of a favorable environment for crypto growth under the new administration.
Ethereum traded for around $1,900 at press, with a slight rise in the last 24 hours per TradingView. Digital assets have fallen by around 42% since the start of the year, still at a record high of 60% off.
The next major upgrade to Ethereum is the Pectra upgrade. This is scheduled to be released on Ethereum Mainnet next month. This upgrade is intended to improve network performance, improve validator participation, and introduce several important features, such as the EIP-7702 and EIP-7251.
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