Standard Chartered: Ethereum’s Structural Decline to Persist
Standard Chartered Bank pointed out in a research report yesterday (17th) that Ethereum (ETH), the second-largest cryptocurrency, is expected to continue its current structural decline. The bank has significantly revised its forecast for ETH by the end of the year from the previous $10,000 to $4,000.
(Background: Standard Chartered: Bitcoin may test key support levels of $69,000 to $76,500 in the short term)
(Context: Standard Chartered: Bitcoin’s decline is due to weak U.S. stocks, with two catalysts pushing BTC to aim for $200,000 by year-end)
Ethereum’s Structural Decline Will Continue
In this report, Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, indicated that Ethereum is currently at a crossroads. Although several of its indicators still dominate the blockchain space, this dominance is gradually waning.
Geoff Kendrick further noted that Ethereum’s proud Layer 2 networks, originally designed to enhance Ethereum’s scalability, have resulted in a market capitalization reduction of $50 billion solely due to the Layer 2 network Base, which is under Coinbase.
To halt this trend, Standard Chartered stated that the Ethereum Foundation may need to alter its business direction, such as implementing taxation on Layer 2. Additionally, if the tokenized market can achieve significant growth, Ethereum might capture about 80% of this market share due to its security, which could provide some support for Ethereum.
Bitfinex: Bitcoin May Enter Long-term Consolidation
In addition, regarding Bitcoin’s future performance, Bitfinex Exchange published a report yesterday (17th) stating that Bitcoin’s decline from January 20 to last week’s low of $77,041 is the second-deepest downward adjustment in this bull market. Although previous cycles indicate that a 30% pullback is common, the demand brought by institutions and ETFs in this cycle has historically supported Bitcoin, suggesting that this significant decline may indicate a market that is different from previous ones.
Bitfinex further indicated that, from multiple perspectives, Bitcoin may enter a long-term consolidation phase, or even face further downside risks:
- Weakening institutional demand: Continuous outflows from Bitcoin spot ETFs indicate that institutional buyers have limited capacity to counter selling pressure;
- Short-term holders’ selling pressure: Current short-term holders are in a state of unrealized losses and are very likely to capitulate, leading to further selling pressure in the market;
- If long-term holders and institutions cannot continuously absorb market supply or even exit their investments, the risk of further declines may increase;
- The U.S. economic outlook is at a crossroads with uncertainties; without strong economic factors to support it, Bitcoin may struggle to regain upward momentum.
As of the time of writing, Bitcoin is reported at $83,051, down 0.27% in the last 24 hours, while Ethereum continues to challenge the stability of the $1,900 level, rising 0.21% in the last 24 hours.
Related Reports
- Standard Chartered: Three reasons driving Bitcoin to $200,000 this year; whales buying large amounts of BTC call options during the dip
- Will Bitcoin retest the bottom? Standard Chartered: BTC may drop another 10% if it loses the $90,000 support
- Standard Chartered: If the Republican Party gains full control of Congress, Bitcoin may reach $125,000 by year-end