The future of Ethereum is enveloped in significant uncertainties, particularly with the decline in price projections for 2025. Ethereum’s drop below the $2,000 level continues to shake investor confidence, leading banking giant Standard Chartered to revise its 2025 Ethereum forecast from $10,000 to $4,000.

This decline follows the growth of Layer-2 (L2) solutions that extract transaction fees from Ethereum’s mainnet, causing losses in Ethereum’s market share. Economists warn that a reduction in Ethereum’s future economic activities could adversely impact the network’s long-term value.

ETHEREUM’S MARKET POSITION AND LAYER-2 SOLUTIONS Ethereum faces a challenging period amid increased competition from Layer-2 solutions. Geoffrey Kendrick from Standard Chartered notes that Ethereum has now become a “commodity.” User migration towards Layer-2 solutions offering cheaper and faster transaction fees threatens Ethereum’s revenue model. L2 solutions divert earnings from Ethereum’s validators to other platforms, weakening Ethereum’s market share. Allegations that Coinbase’s Base blockchain has stolen $50 billion from Ethereum’s market value highlight the severity of the situation. The decline in Ethereum’s revenue model has prompted analysts to question the network further. L2 solutions increase transaction density in Ethereum’s network, raising long-term concerns about the sustainability of ETH’s fee-based revenue structure. Ethereum may need to make drastic reforms to address these issues; otherwise, it risks losing its position as the leading platform for smart contracts. MARKET ANALYSIS AND TECHNICAL INDICATORS Ethereum’s price forecasts indicate a downward trend as ETH fails to surpass the $2,000 resistance level and indicators point towards a decline to $1,500. Technical indicators, particularly the Relative Strength Index (RSI) and Stochastic Oscillator, signal an intensification of Ethereum’s downward momentum. Market selloffs in the crypto market reinforce the environment of uncertainty. According to Coinglass data, the liquidation of $30.21 million in futures contracts last week led to movements of $15.77 million and $14.25 million in long and short-term trades, respectively. However, if Ethereum’s price remains above $2,200 in daily closings, a bull run could commence, pushing it up to $2,800. INSTITUTIONAL DEMAND AND COMPETITION Institutional demand for Ethereum has plummeted to the lowest levels in recent years as rival blockchains gain momentum. Despite continuing to be the leading platform for dApps and smart contracts, Ethereum’s market share is dwindling due to increased competition from rival blockchains. This situation emerges as one of the primary factors calling into question Ethereum’s future leadership. ETHREUM’S FUTURE PERSPECTIVE While Kendrick suggests that Ethereum could introduce fees on Layer-2 networks to recoup lost revenue, he is not optimistic about the strategy’s effectiveness. He questions how effectively Layer-2 solutions can improve Ethereum’s revenue structure, citing the example of governments imposing taxes on state-owned mining companies. Without intervention, there is an increased likelihood of Ethereum underperforming among crypto investors in the long term. Standard Chartered forecasts a continued decline in blockchain economic activities for Ethereum until 2027. While short-term recoveries are possible, the adoption of Layer-2 solutions will make it more challenging for Ethereum to reclaim its former leadership in the digital asset market. Some analysts believe that Ethereum’s long-term success hinges on how effectively it can manage Layer-2 integrations. The gradual transition to Ethereum 2.0, increased scalability and efficiency could mitigate the impact of Layer-2 solutions, but these updates are necessary for restoring confidence in the network’s economic health.