Coinbase’s Ethereum Selling Impacts Market

An analyst from Standard Chartered, a multinational bank, has reported that Coinbase “proactively sold” 12,652 Ethereum (worth approximately $37 million) in Q4 2024. This selling, driven by the demand from Coinbase’s layer-2 network, Base, negatively affects Ethereum’s price performance.

Earlier this week, Standard Chartered reduced its 2025 price target for Ethereum from $10,000 to $4,000. Geoff Kendrick, the Global Head of Digital Assets Research, stated that Base’s activities have removed around $50 billion from ETH’s market cap due to profit-taking activities, rather than demand.

Kendrick mentioned, “Increased activity on Base increases demand for ETH initially, but about 80% of Base’s revenue profits are sold for repatriation to Coinbase.” He used Coinbase’s quarterly Ethereum holdings to support his assertion of proactive selling, concluding that 1,558 ETH was net sold over three quarters, indicating Coinbase’s strategy of not holding onto Base’s ETH profits.

Utilizing the average price in Q4 2024, Kendrick estimated that Coinbase sold approximately $37.68 million worth of ETH. Following the Decun upgrade, which reduced gas fees on layer-2 networks, Kendrick noted that Coinbase’s selling was a “normal risk-adjusted decision process.”

The analyst also highlighted how transactions via layer-2 networks impact the underlying blockchain, leading to lower Ethereum fees and affecting its overall economic output (referred to as “GDP”). As a result, the Foundation has to mint more new coins to cover its expenses.

Base, which is created by Coinbase, is designed to extend the capabilities of Ethereum while providing a bridge from the centralized exchange. Kendrick observed that Coinbase’s buying and selling patterns reflect a strategy to maximize profits depending on market conditions.

Despite the lowered price target, Ethereum has seen a 5.6% increase in value today and a 4.6% rise over the week, according to CoinGecko. In a related note, over 70% of users on decentralized prediction market MYRIAD believe that Ethereum will trade above a relative price of $0.023 to Bitcoin by the week’s end.