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Remember when Standard Chartered predicted in January that Ethereum could skyrocket to $10,000 by the end of 2025? Well, they’ve just updated their forecast, and it’s quite a shift. The bank has dialed back its year-end target for Ether, cutting it by a significant 60%.

According to their latest report, released today, this adjustment comes as Standard Chartered notes that Ethereum is facing stiffer competition, especially from layer 2 solutions like Base. They also point out that Ethereum’s recent Dencun upgrade hasn’t been enough to help it maintain its previously dominant position in the market.

Standard Chartered acknowledges that Ethereum still holds a leading position in many important blockchain metrics. However, they emphasize that its overall dominance has been gradually weakening over time.

The rise of layer 2 blockchains, initially intended to support Ethereum by boosting its scalability and lowering transaction costs, are now inadvertently pulling economic value away from the main Ethereum network, according to the report.

Specifically, Base’s strategy of sharing profits with its parent company, Coinbase, is highlighted as a particularly potent competitive move. Standard Chartered estimates that this factor alone has already reduced Ethereum’s market cap by around $50 billion, and they anticipate this trend to persist.

“Ether is at a crossroads,” the report states plainly, adding that while it “still dominates on several metrics,” its leading position is undeniably slipping.

Despite these ongoing headwinds, Standard Chartered does see a potential bright spot for Ethereum in the tokenization of real-world assets.

The bank suggests that Ethereum’s robust security infrastructure might allow it to secure a substantial 80% market share in this burgeoning sector. This could potentially stabilize, or even reverse, the current structural decline they’re observing.

Geoff Kendrick, the head of digital assets research at Standard Chartered, believes that the Ethereum Foundation could proactively change its commercial strategy to combat this value leakage. He even proposed options like taxing layer 2 solutions. However, Kendrick himself doubts the EF will actually make such a change to its existing model.

Looking further ahead, Standard Chartered predicts the ETH/BTC ratio will decrease to 0.015 by the end of 2027. If this happens, it would represent Ether’s lowest ratio against Bitcoin since 2017.

While the bank anticipates Ether’s price will bounce back somewhat from current levels—driven by a wider crypto market rally led by Bitcoin—they still believe Ether will likely continue to perform less strongly than Bitcoin.

Just last year, Standard Chartered had forecasted Ethereum to reach $8,000 by the end of this year and an even more ambitious $14,000 by the close of 2025.

Back then, analysts at the bank believed that the main drivers for these price surges would be the approval of spot Ethereum ETFs in the US, along with the positive impact of the Dencun upgrade on Ethereum’s network.

And earlier this year, their optimism continued, with a prediction that Ethereum could even touch $10,000 by the end of 2025, fueled by an expectedly favorable crypto environment under the new administration.

As of writing, Ethereum is trading around $1,900, experiencing a slight uptick in the past 24 hours, according to TradingView. However, it’s still down roughly 42% since the start of the year and remains a considerable 60% below its all-time peak.

Looking to the near future, Ethereum’s next big step is the Pectra upgrade, slated to go live on the main network next month. This upgrade is designed to boost network performance, encourage greater participation from validators, and introduce some significant new features like EIP-7702 and EIP-7251.

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