Standard Chartered Slashes Ethereum Price Target Amid Layer 2 Concerns
In a dramatic shift that has sent shockwaves through the crypto market, Standard Chartered Bank has significantly lowered its Ethereum price prediction from $10,000 to $4,000 for 2025. This 60% reduction comes as the banking giant cites growing concerns over Layer 2 networks’ impact on Ethereum’s market value.
The world’s second-largest cryptocurrency has experienced a substantial decline, trading between $1,800 and $1,900, marking a 47% drop from its 2024 peak of $3,352. This bearish trend has been further amplified by Ethereum’s test of critical support levels, raising questions about its near-term trajectory.
Layer 2 Impact: The $50 Billion Drain
According to Standard Chartered analyst Geoff Kendrick, Layer 2 solutions like Coinbase’s Base network have effectively drained approximately $50 billion from Ethereum’s market capitalization. This development represents what Kendrick terms as Ethereum’s “midlife crisis,” suggesting that the blockchain has become increasingly commoditized due to its Layer 2 framework.
Technical Analysis Points to Further Weakness
Current market indicators paint a concerning picture for Ethereum investors:
- Price consolidation below both 50-day and 200-day moving averages
- MACD indicator confirming bearish sentiment
- Formation of a descending channel pattern
- Trading volume showing signs of weakness
Potential Recovery Strategies
Standard Chartered outlines two potential paths for Ethereum to address its current challenges:
- Security-First Approach: Leveraging its dominant position in securing real-world asset (RWA) tokenization to maintain its 80% market share
- Layer 2 Revenue Model: Implementing a tax structure for Layer 2 networks, though this option is considered unlikely
Market Implications and Future Outlook
The reduced price target reflects broader concerns about Ethereum’s evolving role in the cryptocurrency ecosystem. While the $4,000 target still represents significant upside from current levels, it suggests a more modest growth trajectory than previously anticipated.
Experts warn that Ethereum’s underperformance could continue in the short term as Layer 2 solutions gain more traction and market share. However, the blockchain’s fundamental role in DeFi and smart contract applications remains strong, potentially providing a foundation for future growth.
Source: Standard Chartered Research