Standard Chartered Cuts Ethereum Price Forecast by 60% Amid Rising Layer 2 Competition

Standard Chartered Cuts Ethereum Price Forecast by 60% Amid Rising Layer 2 Competition

Standard Chartered has significantly revised its Ethereum price forecast, cutting its end-2025 target by 60% to $4,000, down from the previous $10,000 estimate. This adjustment reflects Ethereum's diminishing dominance in the blockchain space and growing competition from layer 2 solutions, particularly Base, which is owned by Coinbase.

Dencun Upgrade and Its Impact

The Dencun upgrade in March 2024, initially expected to bolster Ethereum's position, has had unintended consequences. While it reduced fees and increased net issuance, it also led to a decline in Ethereum's share of blockchain activity. Data indicates that Ethereum's fees have dropped, and its market share is being eroded by layer 2 platforms like Base, which passes profits to Coinbase.

Market Share Erosion and Commoditization

StanChart estimates that Ethereum's market cap has already lost $50 billion due to GDP losses to Base, with further declines expected as Base solidifies its position. Geoff Kendrick, Global Head of Digital Assets Research at StanChart, noted that Ethereum has commoditized itself within its own layer 2 framework, with its fees-to-GDP ratio now matching those of Base and OP Mainnet.

Security Dominance and Long-Term Outlook

While Ethereum's security could help it maintain an 80% share of the tokenized real-world assets market, this alone is insufficient to support a positive medium-term outlook. Kendrick suggests that only a proactive change in commercial direction, such as taxing layer 2s, could reverse this trend, though this is deemed unlikely.

ETH-BTC Ratio and Price Projections

StanChart expects the ETH-BTC ratio to fall to 0.015 by the end of 2027, marking its lowest point since early 2017. Despite this, the bank predicts Ethereum's price in USD will rise from current levels of $1,900, driven by Bitcoin's expected price growth. However, this forecast signals continued underperformance for Ethereum, with price targets of $5,000, $6,000, $7,500, and $7,500 for 2026, 2027, 2028, and 2029, respectively.

This revised outlook underscores the challenges Ethereum faces in maintaining its dominance amid the rise of layer 2 solutions and increasing competition in the blockchain ecosystem.