Standard Chartered Lowers Ethereum Price Target To $4,000: Here's Why A Coinbase Blockchain Is To Blame

Standard Chartered Lowers Ethereum Price Target To $4,000: Here's Why A Coinbase Blockchain Is To Blame

  • 17.03.2025 14:09
  • benzinga.com
  • Keywords: Ethereum, Bitcoin

Standard Chartered predicts Ethereum's price will drop to $4,000 by 2025 due to Base blockchain draining its ecosystem revenue. The report highlights that Layer-2 networks like Base are extracting profits without contributing proportionally to Ethereum's growth, leading to a decline in its market value and dominance over Bitcoin.

Coinbase ReportsSCBFFsentiment_dissatisfiedCOINsentiment_satisfied
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Estimated market influence

Standard Chartered

Standard Chartered

Negativesentiment_dissatisfied
Analyst rating: Buy

warned about Ethereum's decline relative to Bitcoin and called for taxation of Layer-2 profits, particularly Base developed by Coinbase. They estimate a $50B loss in Ethereum's market cap due to Base.

Coinbase

Coinbase

Positivesentiment_satisfied
Analyst rating: Buy

developed Base, which extracts 80% of revenue from the Ethereum ecosystem, leading to significant market cap reduction for Ethereum.

Context

Analysis of Standard Chartered's Ethereum Price Target Revision and Market Implications

Key Facts and Data Points:

  • Revenue Drain: Base (a Layer-2 blockchain) extracts 80% of its revenue from the Ethereum ecosystem without proportionally contributing to Ethereum's ecosystem.
  • Market Cap Impact: The rise of Base has drained approximately $50 billion in value from Ethereum's market capitalization.
  • Price Target Revision: Standard Chartered lowered its Ethereum price target to $4,000 by 2025 (previously $10,000).
  • ETH-BTC Ratio Prediction: The ETH-BTC ratio is expected to fall to 0.015 by 2027, the lowest since early 2017.

Market Impact:

  • Ethereum's ecosystem has seen a significant shift in value generation due to Layer-2 blockchains like Base.
  • The introduction of Layer-2 solutions (e.g., Arbitrum and Optimism) has commoditized Ethereum within its own ecosystem, allowing secondary blockchains to dominate revenue generation.
  • Standard Chartered warns that Ethereum's decline relative to Bitcoin will likely persist without corrective measures.

Competitive Dynamics:

  • Base's Dominance: Base accounts for the majority of new addresses among major Layer-2s, suggesting accelerating market dominance.
  • Super Profits Extraction: The report compares Layer-2 profitability to "super taxes" earned by foreign mining companies, highlighting the need for regulatory intervention.

Strategic Considerations:

  • Standard Chartered proposes taxing Layer-2 super-profits as a potential solution to reverse Ethereum's decline.
  • Ethereum upgrades (e.g., 2022 Merge and 2024 Dencun Update) have improved scalability but may have inadvertently weakened the network's economic value.

Long-term Effects:

  • Without intervention, Ethereum's market share and ecosystem dominance could continue to erode.
  • The concept of blockchain "GDP" (value generated within the ecosystem) suggests that Layer-2s like Base are capturing a growing share of transaction activity and profits.

Regulatory Implications:

  • The report underscores the potential need for regulatory measures, such as taxes on Layer-2 revenues, to preserve Ethereum's value and competitiveness in the blockchain space.