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Standard Chartered has made headlines by slashing its 2025 price target for Ethereum (ETH) from $10,000 to $4,000, attributing it to Coinbase’s profit-taking actions.
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Coinbase reportedly sold 12,652 ETH, worth approximately $37 million, during Q4 2024, as profit-taking negates the advantages of increased layer-2 activity.
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Geoff Kendrick, Global Head of Digital Assets Research at Standard Chartered, remarked, “My view is that increased activity on Base increases demand for ETH, but then all of Base’s profits are sold to effectively repatriate profits back to Coinbase.”
Standard Chartered has cut Ethereum’s price forecast amid Coinbase’s profit-taking actions. Read on for insights into the implications for the crypto market.
Impact of Coinbase’s Profit-Taking on Ethereum’s Price
Standard Chartered’s significant revision of Ethereum’s price target highlights a crucial factor in the crypto market—profit-taking by exchanges. The bank posits that Coinbase’s proactive selling of Ethereum has adversely affected the blockchain’s price dynamics. During Q4 2024, the sale of 12,652 ETH signifies a tactical decision by Coinbase to convert profits from its operations on the layer-2 network Base.
Decoding Coinbase’s Strategy with Layer-2 Networks
According to Kendrick, Coinbase’s layer-2 network Base drives demand for ETH yet leads to profit-taking that ultimately lowers ETH’s market cap. He asserts that the operations on Base—which aims to enhance Ethereum’s functionalities—result in diminished fee collection for the Ethereum network, characterizing this scenario as detrimental to its economic health. Kendrick claims that Coinbase’s rational behavior can be interpreted as a standard business decision, saying, “The fact they net bought in Q3 (when prices were low) and net sold in Q4 (prices higher) suggests they are optimizing profits.”
Proactive Selling and Market Dynamics
The implications of Coinbase’s actions extend beyond mere profit maximization; they reflect broader market dynamics. Kendrick’s analysis reveals a pattern where the net selling of ETH counteracts the positive effects of increased layer-2 transactions. This can lead to a scenario where Ethereum’s governance relies heavily on external factors, including exchange behavior and market psychology.
The Broader Picture: ETH’s Performance and Predictive Trends
Despite Standard Chartered’s bearish forecast, Ethereum has shown resilience, boasting a gain of 5.6% on the day and 4.6% over the week, according to CoinGecko. This positive movement may indicate that investor sentiment is strong enough to overshadow concerns about profit-taking. Moreover, recent data from decentralized prediction market MYRIAD suggests that over 70% of users anticipate Ethereum’s relative price to Bitcoin will exceed $0.023 by week’s end, reflecting ongoing optimism in the market.
Conclusion
In conclusion, while Standard Chartered’s revised price target for Ethereum raises eyebrows, the current pricing trend reveals a complex interplay between Coinbase’s operational decisions and market performance. Ethereum’s resilience, despite profit-taking, may suggest that the cryptocurrency ecosystem is adapting to new economic realities. Investors are advised to closely monitor these developments as they unfold, considering both market sentiments and structural changes within the blockchain technology landscape.
