TLDR
ETH sentiment has plummeted to a yearly low as per Santiment, potentially indicating a market reversal
Ethereum has declined over 20% within the last month, lagging behind Bitcoin which has only dropped by 10%
Experts propose that extreme bearish sentiment often coincides with market bottoms and may precede notable recoveries
The Trump family-supported World Liberty Financial augmented Ethereum holdings by $10 million within a week
ETH is presently encountering resistance at $2,220, with crucial support levels at $2,100 and $2,050
Ethereum, the second-largest cryptocurrency by market capitalization, has been undergoing a phase of price weakness and dwindling social sentiment. Insights from blockchain analytics firm Santiment indicate that trader sentiment towards Ether has reached its lowest level of the year. This transpires as ETH has decreased over 20% in value over the preceding month.
The price decrease has proven to be more drastic than that of Bitcoin. While ETH is trading around $2,176, BTC has only experienced a decline of about 10% in the same time frame. This disparity in performance has contributed to the negative sentiment across various social media platforms.
Santiment monitors discussions regarding Ethereum across multiple social channels such as X (formerly Twitter), Reddit, and Telegram. Their analysis unveils a transition from the optimistic sentiment observed during the previous year’s crypto bull market to the current pessimistic outlook that commenced after September.
Crypto market analysts suggest that this negativity might actually signal a positive opportunity. Santiment highlighted in a March 5 post on X that “the bearishness being expressed across social media is a good indicator of a potential turnaround once crypto markets stabilize.”
🐻 Ethereum sentiment has dipped to a year-low as the asset has underperformed compared to other top caps. For those patiently holding their $ETH, the bearishness being expressed across social networks is an encouraging sign of a potential turnaround once crypto markets stabilize. pic.twitter.com/iRaKTvb0Tu
— Santiment (@santimentfeed) March 6, 2025
Mike Cahill, CEO of Douro Labs, stressed the necessity of distinguishing short-term market narratives from long-term fundamentals. He conveyed to Cointelegraph that historically, extreme bearish sentiment has often indicated market bottoms, as price movements typically lead sentiment rather than follow it.
Cahill retains a positive outlook on Ethereum’s future. He believes that if cryptocurrency markets achieve stability, “Ether is well-situated to benefit from renewed liquidity and ongoing institutional interest.”
Increasing Institutional Support
This perspective is echoed by Dominick John, an analyst at Kronos Research. John notes that while Ethereum’s recent performance may dishearten short-term investors, extreme negativity often signals the bottom of a market cycle.
Several elements could activate an ETH price recovery. These include decreasing interest rates or clearer regulatory advances concerning staking ETH within ETFs. John also mentioned the persistent purchasing behavior of institutional players as a favorable sign.
An instance of institutional interest arises from World Liberty Financial (WLFI), a DeFi platform supported by the Trump family. WLFI has reportedly boosted its Ethereum holdings by $10 million over a seven-day span, reflecting growing long-term confidence in the asset.
Technical metrics are also providing optimism for ETH holders. Ethereum’s MVRV Z-Score, which aids in evaluating whether the token is overvalued or undervalued, has fallen to its lowest level in 17 months. The last instance this score reached similar lows occurred in October 2023, just prior to ETH surging by nearly 160%.
Previous declines in this metric during December 2022 and March 2020 also preceded bull markets. This historical trend suggests the current low score could potentially herald a price recovery.
Some analysts point to structural challenges impacting Ethereum’s performance. Jack Tan, co-founder of Woo X crypto exchange, associates ETH’s difficulties with diminishing network activity and decreasing total value locked (TVL).
Tan explains that Ethereum’s diminished layer-1 transaction volume relative to prior peaks has lowered the burn rate. This undermines its deflationary effect. Furthermore, competition from high-performing layer-1 blockchains such as Solana has scattered the ecosystem.
The movement of activity towards layer-2 solutions has also lessened the demand for ETH as a settlement layer. According to Tan, Ethereum previously reaped significant benefits from the DeFi boom, but this edge has waned.
In terms of short-term price movement, Ethereum recently tried to surpass the $2,320 resistance level but was unsuccessful. The price has since retreated and is now trading below $2,220 and the 100-hourly Simple Moving Average.
Technical analysis reveals that ETH broke beneath a crucial ascending channel with support at $2,220. The price reached a low at $2,103 and is currently attempting a recovery. It has surpassed the $2,120 and $2,150 resistance levels but encounters challenges near $2,220.
If Ethereum can overcome the $2,220 and $2,320 resistance thresholds, it could spark a substantial upward movement. The next significant resistance would be around $2,420. Surmounting this could drive the price towards $2,500 or even $2,550 in the short term.
Conversely, if Ethereum fails to breach the $2,220 resistance, it might initiate another downward movement. Initial support is approximately at $2,100, with major support at $2,050. A break below these levels might push the price toward $2,000 or even $1,880 in the immediate future.
For the moment, ETH holders are monitoring these essential price levels as analysts continue to discuss whether the extreme bearish sentiment signifies a bottom or if further declines are imminent.
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