Wall Street Rushes into Ethereum, Why Does ETH Price Continue to Weaken?

Original Author: Alex O'Donnell

Original Translation: Saoirse, Foresight News

The Ethereum network is gaining recognition from Wall Street, but investors remain cautious about ETH.

In recent months, institutional adoption of Ethereum has accelerated significantly. Since May, several financial institutions including JPMorgan, Robinhood, and Morgan Stanley have successively launched various Ethereum-related products and services. In July, several former members of the Ethereum Foundation established the non-profit independent organization Ethereum Institutional, aiming to accelerate the adoption of Ethereum by major institutions.

Meanwhile, Ethereum co-founder Vitalik Buterin released a major network upgrade roadmap named "Lean Ethereum," designed to enhance Ethereum's privacy capabilities and resistance to quantum attacks.

However, the market has not responded positively. At the time of writing, ETH is trading slightly above $1,900, a decline of over 60% from its all-time high of approximately $4,950 in August 2025. Analysts generally believe it will be difficult for ETH to return to its previous highs in the short term. On July 1, Citi lowered its 12-month price prediction for Ethereum from $3,175 to $2,240, citing weakening investor demand and continued net outflows from Ethereum ETFs.

Galaxy's research team stated that the reason for the disconnect between market performance and fundamentals is clear: an increasing number of investors are unclear about ETH's value growth logic.

Wall Street's Expansion Continues

Today, institutional use of blockchain is no longer limited to pilot projects, and Ethereum is one of the biggest beneficiaries of this trend.

In May, JPMorgan Asset Management launched its second tokenized money market fund, JLTXX, on the Ethereum public chain. In July, online brokerage Robinhood launched Robinhood Chain, an Ethereum Layer 2 network specifically designed for financial services and tokenized assets.

Morgan Stanley is also pushing ETH further into mainstream securities accounts. Eligible E*TRADE users can now trade and hold Ethereum, Bitcoin, and SOL.

The reason institutions are increasingly committing to Ethereum is its mature developer ecosystem and its large-scale, decentralized validator network. It is likely that institutional deployment will continue to accelerate.

In a statement on July 1, ConsenSys CEO Joe Lubin mentioned that the vast majority of stablecoin issuance, tokenized assets, decentralized finance, and various on-chain financial infrastructures will prioritize Ethereum.

Ambitious Upgrade Plans

Furthermore, Ethereum is on the verge of a comprehensive technological overhaul, which will further enhance its appeal to various institutions.

In July, Buterin unveiled the "Lean Ethereum" development roadmap, with a complete restructuring cycle of three to four years. He stated that the scale of this upgrade is comparable to Ethereum's transition to a proof-of-stake consensus mechanism in 2022.

The upgrade aims to reduce the cost of using Ethereum, improve network security, and optimize user privacy – a crucial factor for institutional traders. If the upgrade is successfully implemented, Ethereum could become one of the first blockchains with reliable resistance to quantum attacks.

Ethereum Foundation researcher Justin Drake stated in July that strong security attributes will become a natural advantage in attracting global institutions to migrate to Ethereum.

Economic Fundamentals Remain Uncertain

Despite a series of positive news, the price of ETH remains sluggish.

One root cause lies in Ethereum's scaling solutions. Ethereum heavily relies on Layer 2 blockchains to achieve lower-cost and more efficient transaction processing.

Theoretically, higher on-chain activity generates more fees, increasing demand for ETH. However, data from L2Beat shows that, since 2024, the vast majority of transactions within the Ethereum ecosystem have been handled by Layer 2 networks, which only periodically settle on the Ethereum mainnet.

Scaling solutions have significantly reduced transaction costs, allowing Ethereum to handle more traffic, but they have also broken the link between on-chain activity and demand for ETH: a large volume of transactions has moved off the mainnet, reducing the fees earned by the Ethereum mainnet.

Researchers at 21Shares stated in January that this change benefits ordinary users but presents both pros and cons for ETH holders. Unless total on-chain transaction volume surges enough to offset the decline in fees, lower fees will reduce the amount of ETH burned.

Market Predictions are Polarized

Currently, Ethereum is likely to evolve into a core piece of financial infrastructure, but how much of the resulting dividends ETH holders will ultimately capture remains uncertain. Price predictions from various industry players vary widely.

Citi predicts the ETH price will be slightly above $2,000 in 12 months; Standard Chartered is more optimistic, forecasting ETH to reach $4,000 by the end of 2026 and $40,000 by 2030.

BitMine Chairman Tom Lee is even more aggressive, suggesting a long-term price target of up to $250,000 for ETH, corresponding to a total market capitalization of approximately $30 trillion.

In summary, the probability of Ethereum becoming mainstream core financial infrastructure is increasing, but whether ordinary holders can fully share in the benefits of this industry development remains highly uncertain.