Ether sentiment hits yearly low but that could be a good thing: Santiment

Social sentiment over Ether has hit a new low for the year as the price underperforms that of other cryptocurrencies; however, this could signal that it’s ready to bounce back, according to Santiment. 

Santiment’s social sentiment tracker found that traders’ discussions about Ether on various social media channels like X, Reddit and Telegram are more bearish compared to other major cryptocurrencies, the blockchain data platform said in a March 5 X post.

“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 said.

The price of Ether (ETH) is down over 20% in the last month, according to CoinMarketCap, with the second-largest cryptocurrency trading hands at $2,176. In contrast, Bitcoin (BTC) has dropped just 10% over the last month, trading for $88,000 per coin.

Speaking to Cointelegraph, Mike Cahill, CEO of Douro Labs, a key contributor to the decentralized data network, the Pyth Network, said while Ether’s underperformance might be leading to a decline in social sentiment, it’s important “to separate short-term narratives from 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,” he said.

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

From March to September of last year, the sentiment was primarily bullish toward Ether amid a broader crypto bull market, according to Santiment. After September, traders became more bearish, a trend that has continued into the new year. 

Dominick John, an analyst at Kronos Research, told Cointelegraph that Ether’s performance might be discouraging to short-term investors, but there is a silver lining: extreme negativity often means the bottom of a cycle, and it could be “primed for a significant rebound.” 

“Factors like decreasing interest rates or clear regulatory developments around staking ETH within ETFs could push it higher,” he said.

“While the continued buying by institutional players, including Trump’s World Liberty Financial, signals growing long-term confidence.” 

Trump family-backed World Liberty Financial (WLFI) DeFi platform significantly increased its Ether holdings by $10 million over a seven-day period. 

Santiment’s tracker sifts through crypto-specific social media channels such as X for the top 10 words that have seen the most significant increase in social media mentions compared to the previous two weeks.

Related: Has Ethereum lost its edge? Experts weigh in

Analysts have been speculating that Ether is struggling due to weakening network activity, declining total value locked (TVL), and investors’ concerns about its supply emission rate.

Ether’s MVRV Z-Score, a key metric for assessing whether its native token is overvalued or undervalued, has recently dropped to its lowest level in 17 months.

The last time Ethers MVRV Z-Score hit similar low levels was in October 2023, just before it rebounded by almost 160%. The score’s dip in December 2022 and March 2020 also preceded bull runs.

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