Standard Chartered Slashes Ethereum (ETH) Price Forecast by 60% for 2025 Amid Growing Competition and Declining Revenue
Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, is facing increasing challenges in 2025. Standard Chartered, a major international bank, has drastically revised its price forecast for Ethereum, cutting it by a significant 60%. The bank now projects Ethereum to reach just $4,000 by the end of the year, a sharp decline from previous estimates.
This downward revision comes in response to a combination of factors, including Ethereum’s ongoing struggle with competition from Layer-2 solutions, reduced revenue from transaction fees, and the network’s growing scalability issues. These challenges have contributed to a sharp 42% decline in Ethereum’s price since the beginning of 2025 and a 52% drop from its December 2024 peak. As of now, Ethereum is trading at approximately $1,929.
Ethereum’s Struggles with Layer-2 Competition
One of the main reasons for Ethereum’s bleak outlook is the rise of Layer-2 solutions, which have started to significantly impact Ethereum’s market position. Ethereum’s mainnet has always been known for its high gas fees and scalability problems. These limitations have led to the development of Layer-2 networks that offer cheaper and more scalable alternatives. Notably, platforms like Coinbase’s Base blockchain have gained traction among users, providing lower transaction costs and diverting valuable revenue away from Ethereum.
While Layer-2 networks were originally intended to alleviate Ethereum’s scalability issues, they have unintentionally hurt Ethereum’s revenue model. Ethereum’s market cap has dropped by approximately $50 billion due to the competition from these Layer-2 solutions, signaling a shift in the market dynamics. The overall reduction in Ethereum’s transaction fees has also led to a decrease in its revenue generation capacity, further dampening the asset’s outlook.
The Impact on Ethereum’s Economic Fundamentals
Geoff Kendrick, Standard Chartered’s global head of digital assets research, highlighted that Ethereum’s economic fundamentals have weakened significantly. The rise of Layer-2 solutions has exacerbated Ethereum’s scalability issues, making it harder for the network to maintain its position in the competitive blockchain space. Kendrick also pointed to Ethereum’s high net issuance of ETH, which further erodes its value.
Ethereum’s revenue has been declining due to a reduction in gas fees, which were once a significant source of income for the network. With more users migrating to cheaper alternatives, the revenue generated from Ethereum’s mainnet has been steadily decreasing, contributing to the token’s price decline. According to Kendrick, these developments indicate a “structural decline” for Ethereum, meaning that without significant changes, the network is unlikely to regain its former momentum.
Can Ethereum Recover with Tokenized Real-World Assets?
Despite Ethereum’s current struggles, there is still hope for its long-term future. One potential area for growth lies in Ethereum’s involvement with tokenized real-world assets (RWAs), such as real estate, bonds, and other traditional assets. If tokenization becomes more widespread, Ethereum could play a significant role in this emerging market, offering a new source of value and utility.
However, this growth is expected to take time, and it is unlikely to reverse Ethereum’s current downward trend immediately. As Kendrick points out, for Ethereum to truly recover and maintain its position in the blockchain space, it will likely need to address its scalability issues and find ways to increase its revenue generation.
The Role of Layer-2 Networks and Revenue Loss
Aksel Kibar, a chartered market technician, warned that it is too early to assume that Ethereum is undervalued. He emphasized that market reversals often take time and that there are no clear signs of a trend reversal in Ethereum’s price. The current charts suggest that Ethereum is still in a declining trend, and the road to recovery may be long and uncertain.
One of the main reasons for Ethereum’s ongoing struggles is the increased reliance on Layer-2 networks, which have started to take over many of the functions Ethereum’s mainnet once provided. These Layer-2 solutions have become more efficient in terms of cost and scalability, making Ethereum less attractive for developers and users alike.
Ethereum’s inability to address these issues is leading to further revenue losses, and it is unclear how the network can recover without making significant changes to its infrastructure. Ethereum’s reliance on Layer-2 networks for scalability has created a situation where other entities, like Coinbase, are benefiting more from the network’s growth than Ethereum itself.
Ethereum’s Technical Upgrade – Pectra
In an attempt to address some of these issues, Ethereum’s developers are preparing for the upcoming Pectra upgrade. The Pectra upgrade is designed to improve Ethereum’s staking process, which could potentially increase its scalability and usability. However, technical difficulties have delayed the upgrade, and it is now expected to undergo final testing in late March, with a full rollout scheduled for April 25, 2025.
While the Pectra upgrade could offer some much-needed improvements to the Ethereum network, it remains to be seen whether it will be enough to reverse the current trend of declining revenue and market value. The outcome of this upgrade will likely be a key factor in determining Ethereum’s long-term prospects.
Ethereum vs. Bitcoin: A Declining Market Share
Another key challenge facing Ethereum is the growing dominance of Bitcoin in the cryptocurrency market. Despite Ethereum’s technological advancements and broader use cases, Bitcoin has consistently outperformed Ethereum in terms of price and market adoption. Standard Chartered has also warned that Ethereum’s relative value against Bitcoin is likely to continue declining.
As Bitcoin remains the dominant cryptocurrency, Ethereum’s potential for short-term recovery is limited. While a broader market rally driven by Bitcoin could offer some short-term relief for Ethereum, it is unlikely to outperform Bitcoin significantly in the near future. Ethereum’s challenges in terms of competition, scalability, and revenue generation are expected to keep it in a decline relative to Bitcoin.
What’s Next for Ethereum?
In conclusion, Ethereum faces a number of challenges in 2025, including increasing competition from Layer-2 solutions, reduced transaction fees, and a decline in overall revenue. These factors have led Standard Chartered to revise its price forecast for Ethereum, cutting it by 60% to $4,000 by the end of the year.
However, there is still hope for Ethereum’s long-term future, particularly if the network can successfully tap into the market for tokenized real-world assets and address its scalability issues. The upcoming Pectra upgrade may also provide some improvements, but it remains to be seen whether it will be enough to reverse the current downward trend.
For now, Ethereum investors must remain cautious as the network faces significant challenges. While Ethereum’s technology remains innovative, it will need substantial changes to regain its competitive edge and drive long-term growth. The next few months will be crucial in determining whether Ethereum can recover or if it will continue to struggle in the face of growing competition.
