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Ethereum Price Will Continue 'Structural Decline' in 2025: Standard Chartered

Ethereum Price Will Continue 'Structural Decline' in 2025: Standard Chartered

  • 17.03.2025 16:05
  • decrypt.co
  • Keywords: Ethereum, Standard Chartered

Ethereum's price is expected to decline structurally in 2025, potentially reaching $60k by end of next year due to the rise of Layer-2 networks like Base, which have reduced fees and diverted market cap from ETH.

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Estimated market influence

Ethereum

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Analyst rating: N/A

The article discusses the expected structural decline in Ethereum's price and market cap, with Standard Chartered predicting a drop to $60,000 by 2025. The introduction of Layer-2 networks like Base has reduced fees that would have gone to the Ethereum Foundation, impacting its revenue.

Standard Chartered

Standard Chartered

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Analyst rating: Buy

The bank's analyst predicts a decline in Ethereum's price and market share relative to Bitcoin. They attribute this partly to the rise of Layer-2 networks which divert transaction fees away from Ethereum.

Context

Ethereum Price Outlook: Structural Decline Expected in 2025

Key Predictions

  • Price Target: Ethereum (ETH) price expected to decline structurally to $60,000 by end of 2025.
  • Market Cap Trend: ETH-to-BTC ratio will gradually decline until 2027, indicating relative dominance erosion despite potential absolute price increases.

Layer-2 Impact Analysis

  • Base Blockchain Impact: Coinbase's Base blockchain has reduced Ethereum's market cap by $50 billion due to lower transaction fees diverted from the Ethereum Foundation.
  • Fee Dynamics: Lower fees on L2s reduce Ethereum's gas revenue, impacting its "GDP" and leading to increased ETH minting to cover expenses.

Analyst Insights

  • Geoff Kendrick’s View: Structural decline in ETH price is driven by competitive dynamics of Layer-2 networks like Base, Arbitrum, Optimism, Scroll, and zkEVM.
  • Potential Mitigation: Ethereum Foundation could tax L2s to stabilize market share, but Standard Chartered deems this "unlikely."

Pectra Upgrade Details

  • Upcoming Update: The Pectra upgrade aims to enhance ETH staking limits and enable gas fee payments in other cryptocurrencies.
  • Launch Timeline: Expected as early as April 25, with final testnet (Hoodi) scheduled for later this month.

Market Performance Metrics

  • Recent Price Movement:
    • +1.3% in the past 24 hours.
    • -29.6% month-over-month decline.
    • -46.7% year-to-date drop.

Competitive Landscape

  • Solana Update: FalconX completed first-ever block trade for CME Group's Solana futures with StoneX as counterparty.
  • Bitcoin Context: Bitcoin prices dropped after President Trump’s announcement of a strategic reserve, with analysts suggesting a brief slump.

Long-Term Implications

  • Market Share Risk: Ethereum’s dominance may continue to erode if Layer-2 adoption accelerates and the Foundation fails to adapt strategies like taxing L2s.
  • Regulatory Considerations: Potential regulatory impacts on cryptocurrency markets could influence long-term trends, though specifics are unclear.

Strategic Takeaways

  • Investor Caution: Investors should monitor both short-term price fluctuations and long-term structural changes in Ethereum’s market dynamics.
  • Industry Shifts: The rise of Layer-2 networks underscores the importance of adaptability for blockchain projects aiming to maintain market relevance.