Despite Ethereum's strong presence in decentralized finance (DeFi), non-fungible tokens (NFTs), and tokenized assets, its ability to capture value has been diminishing due to the emergence of L2 solutions.

Despite the bearish outlook for 2025, Standard Chartered forecasts a recovery for Ethereum, predicting a price of $6,000 by 2026 and $7,500 by 2027.

The ETH-to-BTC ratio is expected to decline to 0.015 by the end of 2027, marking the lowest level since 2017, indicating Ethereum will lag behind Bitcoin in market cap.

Standard Chartered has revised its price target for Ethereum, predicting a continued 'structural decline' in 2025, lowering it from $10,000 to $4,000.

Geoffrey Kendrick, head of digital assets research at Standard Chartered, attributes this decline to Layer 2 (L2) networks, which he describes as causing a 'midlife crisis' for Ethereum.

The Ethereum community is preparing for the Pectra upgrade, which is expected to enhance ETH staking and allow gas fees to be paid in various cryptocurrencies.

The rise of Ethereum's Layer 2 networks, particularly Coinbase's Base, has significantly impacted Ethereum's market cap, reportedly removing $50 billion.

The Dencun upgrade, launched in March 2024, has empowered L2 solutions, allowing them to capture a larger share of transaction fees, which has further reduced Ethereum's core value.

Kendrick suggests that implementing a 'super tax' on L2s could help redirect economic value back to the main Ethereum blockchain.

Analysts believe that significant changes from the Ethereum Foundation, such as taxing Layer 2 networks, could potentially reverse the current negative trend, although such changes are considered unlikely.

Despite the bearish sentiment surrounding Ether, a potential rally in Bitcoin could boost prices across all digital assets, including Ethereum.

Kendrick noted that market forces could halt Ethereum's decline if there is significant growth in tokenized real-world assets, as ETH's security should allow it to retain an 80% market share in that sector.