Citigroup warns: Ethereum could fall to $4,300 by the end of the year, with the most pessimistic scenario seeing $2,200.

Wall Street giant Citigroup has released its latest price forecast for Ether (ETH), predicting that in a baseline scenario, ETH will fall back to $4,300 by the end of the year, below the current market price of about $4,515. The bank also provided a broader range of fluctuations: in a bull run scenario, it could reach as high as $6,400, while in a Bear Market scenario, it could potentially fall to $2,200.

The Impact of Layer-2 Growth on ETH Value

Citigroup analysts pointed out that the recent growth in Ethereum network activity mainly occurs on Layer-2 networks (such as Arbitrum, Optimism, etc.), and only about 30% of the value from these activities will "pass through" to the Ethereum mainnet (Layer-1).

This means that although the overall ecosystem is active, the direct valuation contribution to the ETH underlying layer is limited, resulting in the current price being higher than the model valuation based on network activity.

Analysts believe that this relatively high valuation may stem from the recent strong capital inflow and the market's high expectations for tokenized assets and stablecoin applications.

ETF inflow has limited impact but high sensitivity

Although the fund inflow scale of the Ethereum ETF is expected to be lower than that of Bitcoin (BTC), Citigroup pointed out that due to the smaller market capitalization of ETH and different liquidity characteristics, the impact of each dollar of ETF inflow on the price is more significant.

However, the bank also warned that ETH's recognition among new investors is still not as high as BTC, so the flow of ETF funds may be limited, making it difficult to form a long-term boosting effect similar to that of Bitcoin.

Macroeconomic Environment: Mild Support, Difficult to Explode

Citi believes that the support of macroeconomic factors for the price of ETH will be relatively limited.

The firm has set a year-end target of 6,600 points for the S&P 500 index, and the US stock market is already close to that level, indicating that it will be difficult for risk assets to achieve significant valuation increases in the short term.

Against this backdrop, the price trend of ETH will rely more on the internal capital flow and technological upgrades within the crypto market, rather than the push from macro capital.

Conclusion

Citigroup's report provides ETH investors with three scenarios:

Basic scenario: $4,300 at the end of the year

Optimistic scenario: Bull run pushes up to 6,400 USD

Pessimistic scenario: Bear Market falls to 2,200 USD

For investors, the rapid growth of Layer-2 is a positive for the Ethereum ecosystem, but its transmission effect on the value of the ETH mainnet is limited. Coupled with the constraints of ETF inflow scale and the macro environment, ETH may face valuation adjustment pressure in the short term.