Ether Sentiment Hits Yearly Low—Is a Rebound on the Horizon?

Ether social sentiment has plunged to its lowest point this year as the second-largest cryptocurrency continues to underperform, blockchain analytics firm Santiment reported. However, some analysts believe this widespread negativity could be an early indicator of an impending recovery.

Santiment’s social sentiment tracker revealed that traders are more bearish on Ether than on other major cryptocurrencies.

Bearish Social Sentiment Signals Possible 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 X post.

Ether’s price has dropped over 20% in the past month, now trading around $2,100, according to CoinMarketCap. In comparison, Bitcoin has fallen only 10%, currently hovering near $89,000.

Despite this decline, Mike Cahill, CEO of Douro Labs, believes investors should separate short-term price fluctuations from long-term fundamentals. He pointed out that historically, extreme bearish sentiment often coincides with market bottoms, suggesting Ether may soon see a reversal.

“If crypto markets stabilize, Ether is well-positioned to benefit from renewed liquidity and continued institutional interest,” Cahill said.

Institutional Confidence in Ether Grows

The shift in sentiment comes amid weaker network activity and concerns over Ethereum’s total value locked (TVL), which analysts say have contributed to its underperformance.

Jack Tan, co-founder of Woo X crypto exchange, pointed out that Ethereum’s lower Layer 1 transaction volume has reduced its burn rate, weakening its deflationary appeal. Competition from faster Layer 1 blockchains like Solana has also diverted activity from Ethereum’s main chain.

“Ethereum previously benefited from the DeFi boom, but the shift of activity to Layer 2 solutions has reduced demand for ETH as a settlement layer,” Tan explained.

Despite these challenges, institutional interest remains strong. World Liberty Financial (WLFI) recently added big amount of Ether to its holdings in just seven days, signaling long-term confidence in the asset.

Santiment’s analysis suggests that Ether’s MVRV Z-Score, a key valuation metric, has hit its lowest level in 17 months. Historically, similar dips in October 2023, December 2022, and March 2020 were followed by significant bull runs, with Ether rebounding up to 160% after each occurrence.