Ethereum’s heading into a tough year.

That’s according to Standard Chartered, which just slashed its prediction on the second-largest cryptocurrency from $10,000 by the end of 2025 to $4,000 — $878 short of its all-time high.

“We see ETH underperformance continuing,” Geoff Kendrick, Standard Chartered Bank’s global head of digital assets research, wrote in a Monday note.

The note is a testament to Ethereum’s ongoing woes. Its tokens are worth 48% less than they were this time last year. By contrast, rivals Bitcoin and XRP are up 22% and 113%, respectively, according to CoinGecko.

The Ethereum Foundation, a non-profit that supports the development of the chain, has also been criticised for being run more like a cooperative than a business worth about $228 billion.

Ethereum is smack dab in the middle of a “midlife crisis” as its 10–year anniversary approaches in July, Kendrick wrote.

The cryptocurrency is losing ground despite the 2024 Dencun upgrade, which was designed to improve the network’s speed and lower the cost of using it to be at a similar level to its rivals.

The approach has instead cannibalised the network’s economy, enabling layer 2 blockchains like Base “to take advantage of the opportunities afforded by [its] open-source nature,” Kendrick wrote.

Layer 2s are networks, systems or technology built on top of a blockchain like Ethereum to help it extend its capabilities.

Base is passing all of its profit to Coinbase, its corporate owner and has already reduced Ethereum’s market cap by $50 billion, Kendrick wrote.

“Around 80% of Base’s GDP is removed from the Ethereum ecosystem and can be treated as lost value,” Kendrick wrote. Kendrick defined a network’s GDP as the aggregate costs paid by users to transact on that network specifically.

His argument echoed that of VanEck’s top digital asset researcher Matthew Sigel, who recently inked a report that reasoned in a similar way.

Kendrick sees the potential for optimism.

Kendrick points to Ethereum exchange-traded funds’ underwhelming first year as a potential pivot point if they can attract more value.

However, to truly get the blockchain out of its funk, the organisation behind the blockchain will need to dramatically change its approach, Kendrick said.

“Only a proactive change of commercial direction from the Ethereum Foundation — such as taxing layer 2s — could achieve that now, in our view,” ” Kendrick said. “We see this as unlikely.”

Andrew Flanagan is a Markets Correspondent for DL News. Have a tip? Reach out to aflanagan@dlnews.com.