After hitting multi-year lows in recent weeks, an analyst at UK bank Standard Chartered expects the Ethereum price to continue its “structural decline” by the end of of the year. As such, SC has revised its 2025 price target from $10,000 to $4,000.

Geoff Kendrick, Global Head of Digital Assets Research at the company expects the ETH-to-BTC ratio, which has hit historic lows in recent months, to slowly decline until the end of 2027.

This means that even if Ethereum goes up in absolute terms, it will increasingly lag Bitcoin by market cap, he wrote in a new market note shared with Decrypt.

Kendrick largely pointed the finger at the rise of Ethereum Layer-2 networks as part of the reason for its relative dominance slipping away, using Coinbase’s Base blockchain as the main example.

A Layer-2 is an off-chain network built on top of a blockchain to help extend its capabilities. Aside from Base, other Ethereum Layer-2s include Arbitrum, Optimism, zkSync Era, Polygon zkEVM.

The analyst estimated that Base has removed $50 billion from ETH’s market cap. Kendrick argues this is because when users make transactions on these L2s instead of the original Ethereum network, fees go to organizations other than the Ethereum Foundation (such as Coinbase), reducing the fees it receives.

Kendrick argued that these lower fees directly impact the price of ETH, as it lowers the “GDP” of the Ethereum blockchain and the amount of gas fees it collects from transactions, meaning the Foundation mints more new coins to pay expenses.

The analyst did posit that a proactive “change of commercial direction from the Ethereum Foundation – such as taxing Layer-2s” could mitigate these issues and improve its market share, but said they think this is “unlikely.”

BASE may have proved a very profitable project for Coinbase. The company doesn’t disclose the network’s revenue directly, but Coin Metrics estimates Base generated approximately 7,417 ETH (roughly $24 million) in profit during the final quarter of 2024.

Kendrick pointed out some other possible avenues whereby ETH could keep its market dominance; for example, if tokenized real-world assets, which commonly use Ethereum, were to suddenly surge in popularity. The analyst feels ETH’s security credentials will maintain its popularity in this area but stated, “this is no longer a sound basis for our medium-term views.”

Ethereum Pectra Upgrade Looms

The gloomy predictions from some analysts come as the Ethereum community is preparing for Pectra, its biggest update since 2022’s “The Merge.” Its introduction could bring significant improvements in ETH staking, dramatically raising current limits, as well as the ability to pay gas fees in cryptocurrencies other than ETH.

Despite several technical mishaps while testing the update, it could hit the mainnet as early as April 25. Developers plan to launch a final testnet, Hoodi, later this month.

ETH is up 1.3% in the past 24 hours, according to CoinGecko data. However, it’s down 29.6% month-on-month and 46.7% year-to-date.

Edited by Stacy Elliott.