Standard Chartered has changed its 2025 year-end price target for Ethereum from $10,000 to $4,000, citing structural challenges within the Ethereum ecosystem. 

The bank’s analysts attribute this adjustment to the impact of Layer 2 solutions, particularly Coinbase’s Base network, which has reduced Ethereum’s (ETH) market capitalization by an estimated $50 billion.

Layer 2 networks like Base were developed to enhance Ethereum’s scalability by reducing transaction fees and congestion. 

However, Standard Chartered’s research indicates that these solutions may be diverting revenue away from the main Ethereum network. 

Base, for instance, channels its profits to Coinbase, potentially diminishing Ethereum’s overall market share.

Declining ETH/BTC ratio

The bank also forecasts a decline in the ETH/BTC ratio, predicting it will reach 0.015 by the end of 2027, a level not seen since 2017. This suggests that Ethereum may underperform relative to Bitcoin in the coming years.

Despite these concerns, Ethereum continues to lead in several key areas, including decentralized finance, stablecoins, and tokenized assets. 

Yet, its dominance has been gradually decreasing. Standard Chartered noted that without proactive measures from the Ethereum Foundation, such as implementing taxes on Layer 2 solutions, this decline is likely to persist.

The bank acknowledged that Ethereum’s price could still rise from its current level of approximately $1,900, especially if Bitcoin experiences significant gains. However, they cautioned that Ethereum’s relative underperformance may continue in the medium term.