Cryptocurrency markets started the week under selling pressure. Standard Chartered highlighted long-term risks of scalability issues on the Ethereum network, leading to a downward revision of price forecasts. Following the bank’s warnings, Bitcoin and Ethereum ETFs declined.

Experiencing a weak start to the week, cryptocurrency markets faced selling pressure after Standard Chartered’s concerning statements about Ethereum. The bank mentioned that changes on the Ethereum blockchain could create long-term pressure on the network’s scalability, leading to a downward revision of price forecasts. Before the U.S. markets opened on Monday, Bitcoin decreased by 0.5% to $83,467. Ethereum, on the other hand, showed more resilience compared to the overall market, trading at $1,914 with a 0.2% increase. The general cryptocurrency market value decreased by 0.42% to $2.73 trillion, while the CoinDesk Market Index recorded a 3.2% increase in the last 24 hours.

EXPECTED BENEFITS NOT DELIVERED BY LAYER 2 SOLUTIONS
Geoffrey Kendrick, head of digital assets research at Standard Chartered, announced in a note to clients their expectation for Ethereum to stay in a long-term downward trend. They revised their price target for the end of 2025 downwards. Kendrick emphasized that layer 2 solutions developed to enhance Ethereum’s scalability did not deliver the expected benefits, suggesting that Coinbase’s Base layer 2 blockchain subtracted around $50 billion from Ethereum’s market value.

NET OUTFLOW OF $68.41 MILLION NOTED
Decreases in the ETF markets also attracted attention. Bitcoin-based exchange-traded funds lost value in pre-market trading on Monday. Bitwise Bitcoin ETF and VanEck Bitcoin ETF each experienced a 1.5% decrease. According to SoSoValue data, a total net outflow of $68.41 million was observed in the group of 11 funds composed of Bitcoin ETFs on Friday. Ethereum ETFs painted a similar picture, with Bitwise Ethereum ETF dropping by 1.6% and Franklin Ethereum ETF by 1.4%. The nine-fund group of Ethereum ETFs saw a total net outflow of $35.3 million on Friday.

Shares trading in the cryptocurrency mining sector also started the week with declines. Cango lost 1.9%, Canaan 1.8%, while Digihost showed positive differentiation with a 1.6% increase. On the other hand, the stablecoin market drew attention with increasing transaction volumes. The 24-hour trading volume of Tether’s USDt, the largest USD-backed stablecoin, increased by 66% to reach $59.11 billion. Circle’s USD Coin also saw an 84% increase in trading volume, reaching $6.78 billion.

While concerns regarding Ethereum and the general risk perception in the market are expected to continue to exert pressure on cryptocurrency markets in the short term, investors will closely monitor developments related to Ethereum’s scalability issues.