Ethereum Price Target Cut to $4K: Is Its Market Dominance Fading Fast?

Key Insights:

• Ethereum’s 2025 price target was revised from $10K to $4K by Standard Chartered.
• Layer-2 networks removed $50B from Ethereum’s market cap, weakening its dominance.
• The Pectra upgrade could improve staking and gas fees, launching as early as April 25.

Ethereum price has struggled in recent months as analysts predict a continued decline in its value. A Standard Chartered has now revised its 2025 price target from $10,000 to $4,000, citing structural weaknesses in the network.

Standard Chartered Lowers Ethereum Price Target

Standard Chartered analyst Geoff Kendrick has warned of Ethereum’s diminishing market strength. In a recent market note, he stated that Ethereum is on a “structural decline,” which will likely last until 2027. He also revised Ethereum’s 2025 price target to $4,000, cutting it from the previous $10,000 prediction.

Furthermore, Kendrick pointed to Ethereum’s declining ETH-to-BTC ratio as a critical sign of weakness. This ratio has dropped to record lows, showing that Ethereum is getting outcompeted by Bitcoin. This is although Ethereum price is forecasted to have an absolute increase, though, not as robust as Bitcoin price.

Layer-2 Networks Impact ETH Market Cap

One major factor contributing to Ethereum price weakness is the rise of Layer-2 networks. Kendrick estimates that Layer-2 solutions have removed $50 billion from Ethereum’s market capitalization. These networks, including Base, Arbitrum, Optimism, and Polygon zkEVM, provide cheaper and faster transactions.

As users migrate to these networks, Ethereum’s transaction fees drop, impacting its overall revenue. Kendrick highlighted Coinbase’s Base as a key example, noting that it has significantly reduced Ethereum’s transaction volume. Unlike the Ethereum mainnet, these Layer-2 networks direct transaction fees to different entities, weakening Ethereum’s dominance.

Structural Challenges

Notably, Ethereum’s reliance on transaction fees is a growing concern for analysts. Kendrick argued that lower fees reduce the network’s “GDP,” ultimately leading to a weaker economic structure. The Ethereum Foundation relies on gas fees for revenue, and a decline in earnings could force it to mint more ETH to cover costs.

Kendrick suggested that taxing Layer-2 networks could help Ethereum regain its market dominance. However, he believes that the Ethereum Foundation is unlikely to take such a step. Without intervention, Ethereum’s market position may continue to decline, leaving Bitcoin to widen the gap.

Ethereum Pectra Upgrade and Future Prospects

Interestingly, some enhancements could be delivered in the next upgrade called Pectra that is going to enhance the functionality of the Ethereum network. According to the update, staking is set to be improved, and a possibility of paying gas fees in other cryptocurrencies is to be added. It is due for release on 25 th of April, though it has to undergo some testnet testing.

Despite the upgrade, analysts remain uncertain about Ethereum’s long-term strength. Some believe that Ethereum’s security and real-world asset tokenization could drive future demand. However, Kendrick warned that these factors alone might not be enough to maintain Ethereum’s market dominance.

At the time of writing, ETH price is trading at around $ 3,250 and has risen by 1.3% over the past 24 hours. Although the asset has climbed over the short term, the asset has declined by 29% over the short month. As of now, ETH price is down 46.7% year to date, solidifying the current market challenges Ethereum price is facing.

Disclaimer

In this article, the views and opinions stated by the author or any people named are for informational purposes only. And they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.