Ethereum's price has seen a significant decline since its December 2024 high. From topping the market at $4,107, ETH has dropped more than 52%, facing a grim short-term outlook according to analysts. Despite Ethereum’s stature in Web3 and DeFi, some experts warn against assuming it's undervalued at this point.

Crypto analyst Askel Kibar notes that "bottom reversals take time." Standard Chartered exacerbates the bleak outlook by revising down their end-of-2025 price forecast from $10,000 to $4,000. Geoff Kendrick from the bank attributes this to factors like lower Ethereum fees, increased net issuance, and Layer 2 adoption diminishing Ethereum’s market cap.

Layer 2 solutions like Base, which were expected to enhance Ethereum's scalability, have instead absorbed significant fee revenues, notably benefiting Coinbase, raising concerns over Ethereum's financial future. Analysts from VanEck also echo these concerns, citing the erosion of factors that once made Ethereum valuable. With these developments, Ethereum's short and long-term prospects remain cautious.

For investors, the shifting dynamic of Ethereum versus Layer 2 blockchains needs careful consideration. However, investment risks persist, emphasizing the importance of thorough research in decision-making.