Ethereum’s native cryptocurrency, Ether (ETH), has seen a sharp decline in sentiment, marking its lowest level of the year, according to blockchain analytics firm Santiment. However, historical trends suggest that such extreme bearish sentiment could indicate a market bottom, setting the stage for a potential price recovery.
Social Sentiment on Ether Reaches a Low Point
Santiment’s analysis, which tracks discussions across social media platforms such as X (formerly Twitter), Reddit, and Telegram, indicates that traders’ outlook on Ether has become significantly more negative compared to other major cryptocurrencies. Despite this, analysts believe this bearish outlook could be a precursor to a bullish turnaround.
“For those patiently holding their Ether, the bearishness being projected across social media is a good sign of a potential turnaround once crypto markets stabilize,” Santiment noted in a March 5 post on X.
Ether’s Underperformance Compared to Bitcoin
Over the past month, Ether’s price has declined by more than 20%, currently trading around $2,176, according to CoinMarketCap. In contrast, Bitcoin (BTC) has dropped only 10% over the same period, trading at approximately $88,000 per coin.
Mike Cahill, CEO of Douro Labs, a key contributor to the decentralized data network Pyth Network, explained that Ether’s underperformance may be driving the decline in social sentiment. However, he cautioned against overemphasizing short-term narratives over long-term fundamentals.
“Historically, extreme bearish sentiment has often coincided with market bottoms, as price movements tend to lead social sentiment — not the other way around,” Cahill told Cointelegraph.
Institutional Interest and Market Stability
Should crypto markets stabilize, experts believe Ether is well-positioned to benefit from renewed liquidity and continued institutional investment.
Dominick John, an analyst at Kronos Research, noted that while Ether’s recent price action might be discouraging for short-term investors, extreme negativity often marks the bottom of a cycle.
“Factors like decreasing interest rates or clear regulatory developments around staking ETH within ETFs could push it higher,” John stated. “Additionally, ongoing institutional purchases—such as Trump’s World Liberty Financial increasing its Ether holdings by $10 million in a week—signal growing long-term confidence.”
Factors Contributing to Ether’s Struggles
Analysts point to several factors contributing to Ether’s underperformance, including:
- Weakening Network Activity: Reduced Layer 1 transaction volumes compared to previous market peaks.
- Declining Total Value Locked (TVL): A shift in decentralized finance (DeFi) activity from Ethereum’s mainnet to Layer 2 scaling solutions.
- Supply Emission Concerns: A lower burn rate due to decreased transaction volume has weakened ETH’s deflationary impact.
- Competition from Other Layer 1s: Blockchain networks like Solana are attracting a larger share of developer and user activity.
Jack Tan, co-founder of Woo X crypto exchange, explained that Ethereum benefited significantly from the DeFi boom but has since seen reduced demand for ETH as a settlement layer due to the rise of Layer 2 solutions.
Ether’s MVRV Z-Score Signals Potential Rebound
One of the key indicators supporting a potential price rebound is Ether’s MVRV Z-Score, a metric that helps assess whether an asset is overvalued or undervalued. The score has recently dropped to its lowest level in 17 months, similar to levels seen in October 2023—right before Ether surged by nearly 160%.
Historically, previous dips in the MVRV Z-Score, such as in December 2022 and March 2020, preceded strong market recoveries. This pattern suggests that ETH might be nearing a turning point, potentially setting the stage for a significant price rebound.
The Road Ahead for Ether
Despite the current bearish sentiment, many experts believe that Ether’s long-term fundamentals remain strong. If a major institution or government adds ETH to its strategic reserve—similar to how Bitcoin is being adopted in national reserves—this could serve as a strong catalyst for price appreciation.
For now, investors and traders will be closely monitoring regulatory developments, institutional interest, and macroeconomic factors that could influence Ether’s price trajectory in the coming months.
