Standard Chartered has significantly lowered its 2025 Ethereum price prediction, citing the impact of Layer 2 networks on its profitability.
Standard Chartered's Forecast Reduction
Standard Chartered has reduced its predicted price for Ethereum in 2025 from $10,000 to $4,000, a 60% cut. One of the main reasons for this is the significant profit loss Ethereum is experiencing due to Layer 2 networks like Base.
Challenges with Layer 2 Solutions
Ethereum created Layer 2 solutions to make transactions cheaper and faster. However, these networks are becoming profitable while Ethereum itself is losing its value. Geoffrey Kendrick, the bank’s Global Head of Digital Assets Research, stated, "We estimate that Base (the dominant Layer 2) has removed $50 billion of market cap from Ethereum alone."
Future of Ethereum and Potential Solutions
Despite the lowered forecast, Standard Chartered expects Ethereum's long-term growth. They predict ETH will reach $5,000 in 2026, $6,000 in 2027, and $7,500 by 2028-2029. However, Ethereum might face challenges compared to Bitcoin unless a solution for taxing Layer 2 super-profits is found.
Ethereum finds itself in a challenging situation due to the rapid development of Layer 2 networks. Nonetheless, despite current forecast reductions, the cryptocurrency remains a leader in decentralized finance (DeFi) and tokenized real-world assets in the long term.
