Citi forecasts that Ethereum could hit $6,300 by the end of 2025. The bank’s baseline prediction is $4,300, with a potential low of $2,200, indicating uncertainty in the factors driving its value. Ether’s price is largely shaped by network activity. Recently, most growth has happened in layer-2 networks, which might not strongly affect Ethereum’s base layer. Citi believes that only 30% of this activity helps raise ETH’s price. As a result, current prices may be higher than what activity-based models suggest. Factors like investments, tokenization, and demand for stablecoins are expected to help narrow this gap. Though flows from Exchange-Traded Funds (ETFs) are lower than those for bitcoin, they still impact the price. However, these flows might stay limited because Ethereum has a smaller market cap and is less well-known among new investors. Additionally, general economic factors are expected to have a minimal positive effect, as U.S. equity markets are close to Citigroup’s S&P 500 target of 6,600. Ether’s year-end price forecasts range from $2,200 to nearly $6,300, signifying considerable uncertainty. The current price is above some activity-based models, indicating the market could be overly optimistic. This wide range suggests potential volatility in the last quarter of the year. Given this outlook, there are chances to profit from large price changes. With ETH’s implied volatility above 70% for the past month, buying long straddles or strangles for December expirations could be a smart trading strategy. This method allows us to benefit from big price swings in either direction, without needing to guess which way prices will go. There’s a worry that value from layer-2 networks is not fully returning to the base layer. Total Value Locked in layer-2s has grown by over 50% since early 2025, reaching more than $160 billion, yet Ethereum’s transaction fee revenue has stagnated in the third quarter. This disconnect suggests that ETH may be overvalued, making protective put options a good hedge for existing long positions. Lastly, external support seems weak. Initial inflows for spot Ether ETFs after their 2024 launch were low compared to bitcoin’s, and net flows have slowed this summer. With the S&P 500 now above 6,500 and near its target, there isn’t much expected upside from the broader economic environment to drive ETH prices higher.

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