An analyst from multinational bank Standard Chartered believes that crypto exchange Coinbase “proactively sold” 12,652 Ethereum (approximately $37 million) throughout Q4 2024. They explained that Coinbase’s layer-2 network Base drives demand for Ethereum but the company’s profit taking is hurting the underlying blockchain’s price action.
Standard Chartered slashed its 2025 price target for Ethereum from $10,000 to $4,000 earlier this week. At the time, Geoff Kendrick, Global Head of Digital Assets Research at the bank, claimed that layer-2 network Base had removed $50 billion from ETH’s market cap—now, he’s saying this is because of profit taking.
“My view is that increased activity on Base increases demand for ETH in the first instance,” Kendrick shared with Decrypt. “But then all of Base’s profits (which are circa 80% of all Base revenue) are sold (ETH-USD selling) to effectively repatriate profits back to Coinbase.”
To back up his claim, the analyst points to Coinbase’s quarterly Ethereum holdings for investments and operations which Kendrick then subtracted from the Base profits.
“This tells me that in Q4 2024 Coinbase proactively sold 12,652 ETH,” he explained. “Over the 3 quarters the net proactive selling was 1,558 ETH. So while there are only 3 quarters of relevant post-Dencun data so far, I think we can conclude that Coinbase is not in the business of HODLing Base’s ETH profits.”
Taking the average price in Q4 2024, using the quarter’s open and close, this works out to approximately $37.68 million sold by Coinbase.
Ethereum's Decun upgrade went live in March of last year and significantly reduced the gas fees on layer-2 networks. Since then, the analyst believes, Coinbase has shown its intention to sell as part of a “normal risk adjusted decision process.”
A spokesperson for Coinbase told Decrypt that Base, "earns ETH from sequencer fees, and the ETH we earn is primarily held for long term investment or used for operational expenses, including tax liabilities and reinvesting in growth via things like salaries, grants, acquisitions, and public goods funding."
They added that, "Separately, we also hold some ETH for long-term investment, and Coinbase reports our crypto assets specifically held for long -erm investment as part of our public quarterly earnings filing." Citing the firm's 10K, the spokesperson noted that, "crypto assets held for investment are primarily held long term...we do not engage in regular trading of these assets but may lend them through Prime Financing or stake them," adding that, "Our ETH held for investment grew 20% over the course of 2024."
In the Standard Chartered analyst’s note from earlier in the week, he argued that making transactions via layer-2 networks negatively impacts the underlying blockchain because Ethereum receives less fees overall. In turn, this lowers the “GDP” of the Ethereum blockchain and the amount of gas fees it collects from transactions, meaning the Foundation mints more new coins to pay expenses.
Created by Coinbase, Base is a layer-2 network built on top of Ethereum that aims to help extend the capabilities of the underlying blockchain, as well as offering a bridge off of the popular centralized exchange.
The Standard Chartered analyst believes that looking at Coinbase’s Ethereum holdings over the past three quarters reveals even more about its goals as a company.
“The fact they net bought in Q3 (when prices were low on average) and net sold in Q4 (higher average prices) tells me Coinbase acts like any risk-adjusting profit maximiser would do,” Kendrick added.
Despite Standard Chartered’s target price for Ethereum being slashed, the cryptocurrency is up 5.6% on the day and 4.6% on the week, per data from CoinGecko, while Bitcoin has traded mostly flat during the same time.
As a result, over 70% of users on decentralized prediction market MYRIAD—launched by Decrypt’s parent company DASTAN—believe that Ethereum’s relative price to Bitcoin will be above $0.023 by the end of the week.
This article has been updated to incorporate comments from Coinbase.
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