Standard Chartered has revised its Ethereum (ETH) price forecast for 2025, cutting it by 60%. The bank now expects Ethereum to reach just $4,000 by the end of the year. This drastic adjustment follows Ethereum’s significant price drop in 2025, with its value plummeting by 42% since January and 52% from its December 2024 high. Currently, Ethereum is priced at around $1,929, with many analysts expressing concerns about the asset’s short-term recovery.

The primary reason for this pessimistic outlook is Ethereum’s struggle with increasing competition from layer-2 solutions, which are reducing its transaction fees and overall revenue. Ethereum’s scalability issues have led to the rise of networks like Coinbase’s Base blockchain, which provide cheaper alternatives for users and shift revenue away from Ethereum’s mainnet. This trend has caused Ethereum’s market capitalization to decline by around $50 billion.

Geoff Kendrick, Standard Chartered’s global head of digital assets research, explained that Ethereum’s economic fundamentals are weakening. The network faces high net issuance of ETH, and the reduction in gas fees further diminishes its revenue potential. While Ethereum layer-2 networks were initially seen as a solution to scalability, they are now benefiting other entities like Coinbase, rather than Ethereum itself. Kendrick stated that these factors signal a “structural decline” for Ethereum, with the network needing significant changes to regain momentum.

Ethereum’s long-term prospects could be tied to the growth of tokenized real-world assets (RWAs), such as real estate and bonds, which Ethereum is involved in. If RWAs take off, Ethereum could play a significant role, but this will take time and is not expected to reverse the current downward trend immediately. Kendrick also suggested that Ethereum’s future growth may depend on the Ethereum Foundation taxing layer-2 networks to restore some of the lost revenue.

Aksel Kibar, a chartered market technician, cautioned against assuming Ethereum is undervalued, noting that the charts show no clear signs of a reversal. He stressed that market reversals typically take time, and Ethereum is still in a declining trend.

Despite Ethereum’s struggles, developers are preparing for the Pectra upgrade, which aims to improve ETH staking. However, technical issues have delayed the upgrade, which is now expected to undergo final testing in late March, with the full rollout scheduled for April 25.

Meanwhile, Bitcoin continues to outperform Ethereum, and Standard Chartered expects Ethereum’s relative value against Bitcoin to continue to decline. Although a broader market rally, driven by Bitcoin, could help Ethereum recover slightly in the short term, it is unlikely to outperform Bitcoin significantly in the near future.

Ethereum faces multiple challenges, including competition from layer-2 networks, reduced gas fees, and declining revenue. While there is potential for long-term growth in RWAs, Ethereum’s immediate future looks uncertain, requiring substantial changes to reverse the current downward trend.