Standard Chartered's Geoffrey Kendrick on Thursday warned that activity on Coinbase's COIN Base network is influencing Ethereum ETH/USD price dynamics through indirect selling pressure.

What Happened: Kendrick explained that while higher activity on Base boosts ETH demand initially—due to transaction fees being paid in ETH—the profits generated by Base are ultimately converted to U.S. dollars, weighing on ETH's price.

According to Kendrick, Base, which has become the dominant Layer-2 on Ethereum, funnels approximately 80% of its revenue back to Coinbase.

The exchange, in turn, does not hold Base's ETH profits for long.

"Coinbase is not in the business of HODLing Base's ETH profits," Kendrick stated, highlighting data that shows the company proactively selling ETH in the past three quarters, particularly during periods when ETH prices were higher.

Coinbase's quarterly filings disclose how much ETH it holds, split between operational needs and investment purposes.

Since Ethereum's Dencun upgrade in 2024, Base's profits—paid in ETH—have likely been regularly sold off as Coinbase manages risk in response to market conditions.

Kendrick deduced that Coinbase proactively sold 12,652 ETH in the final quarter of 2024, with net proactive selling of 1,558 ETH over the three previous quarters.

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Why It Matters: Kendrick's remarks build on an earlier Standard Chartered report, where he argued that Base's emergence has removed as much as $50 billion from Ethereum's market capitalization.

"Base now extracts super-profits from the Ethereum ecosystem," Kendrick wrote in the prior note, where he also pointed to Ethereum's broader structural challenges.

He reiterated that Ethereum's transition to proof-of-stake and its Layer-2 scaling model—designed to reduce fees—have unintentionally shifted economic value away from Ethereum to its Layer-2s, primarily Base.

The report also lowered Standard Chartered's ETH-USD price target to $4,000 by the end of 2025, down from a previously projected $10,000.

While Kendrick acknowledged that Ethereum still leads in areas like stablecoins, DeFi and tokenization, he said the Ethereum Foundation may need to consider new economic models, including taxing Layer-2 networks, to reverse the trend.

Absent such measures, Kendrick expects ETH to continue underperforming relative to Bitcoin. He projects ETH-BTC could fall to 0.015 by the end of 2027, marking its weakest level since early 2017.

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