tl;dr

Standard Chartered has revised its year-end price target for Ethereum (ETH) to $4,000, down from $10,000, citing structural weaknesses in the network's economic model. The bank's report, titled "Ethereum — Midlife Crisis," highlights concerns over the impact of Layer-2 (L2) networks, estimating that...

Standard Chartered has revised its year-end price target for Ethereum (ETH) to $4,000, down from $10,000, citing structural weaknesses in the network's economic model. The bank's report, titled "Ethereum — Midlife Crisis," highlights concerns over the impact of Layer-2 (L2) networks, estimating that Base, a key L2, has removed $50 billion from ETH's market cap.

Standard Chartered also cut its Ethereum-Bitcoin (ETH-BTC) forecast and predicts a decline in the ratio to 0.015 by year-end. Despite the downgrade, the bank maintains a more optimistic outlook for Ethereum's long-term prospects, forecasting a recovery to $6,000 by 2026 and $7,500 by 2027.

CONCERNS OVER L2 IMPACT
The report pointed to multiple factors contributing to Ethereum's underperformance. It stated that while the network still dominates in DeFi, NFTs, and tokenized assets, its ability to capture value has diminished. According to Kendrick, the launch of the Dencun upgrade in March 2024 exacerbated the trend by further empowering L2 solutions, which now extract a larger share of transaction fees while reducing users' costs.

The report suggested that Ethereum's GDP loss to L2s could surpass $50 billion over time unless measures are introduced to redirect more economic value back to the main chain. Kendrick proposed that Ethereum consider a "super tax" on L2s, similar to how some governments tax foreign-owned mining companies extracting excess profits.

ETH-BTC RATIO DECLINE
Due to these structural concerns, Standard Chartered also cut its Ethereum-Bitcoin (ETH-BTC) forecast despite the ratio being at all-time lows. The lender predicted that the ratio would decline to 0.015 by year-end, a significant drop from the bank's previous target of 0.05. Despite the downgrade, the bank maintained a more optimistic outlook for Ethereum's long-term prospects, forecasting a recovery to $6,000 by 2026 and $7,500 by 2027.