Ethereum’s social sentiment has plunged to its lowest level of the year as the second-largest cryptocurrency lags behind Bitcoin and other major assets. However, historical trends suggest this extreme bearish sentiment could signal an incoming market rebound, according to blockchain analytics firm Santiment.
Santiment’s social sentiment tracker, which analyzes discussions across platforms like X, Reddit, and Telegram, shows that Ethereum sentiment is more negative than nearly all other major cryptocurrencies.
The blockchain data firm highlighted in a March 6 report that the ongoing bearish outlook could actually be a contrarian indicator—a sign that Ethereum is nearing a price bottom.
“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 stated.
Ethereum’s underperformance is evident in its price action. Over the past month, ETH has dropped more than 20%, currently trading around $2,176—a stark contrast to Bitcoin’s more modest 10% decline over the same period.
Why Bearish Sentiment Could Be a Setup for a Rebound
Market analysts suggest that Ethereum’s struggles could be setting the stage for a significant recovery.
Mike Cahill, CEO of Douro Labs, during an interview with cointelegraph emphasized the need to separate short-term market sentiment from long-term fundamentals, stating:
“Historically, extreme bearish sentiment has often coincided with market bottoms, as price movements tend to lead social sentiment not the other way around.”
He further noted that if crypto markets stabilize, Ethereum is well-positioned to benefit from renewed liquidity and continued institutional interest.
Dominick John, an analyst at Kronos Research, echoed this view, stating that while Ethereum’s weak performance may be discouraging to short-term investors, extreme negativity is often a precursor to a cycle bottom.
Institutional Accumulation Could Fuel Ethereum’s Next Move
Despite the negative sentiment, institutional players continue to accumulate Ether, signaling long-term confidence in the asset.
Recent data reveals that the Trump family-backed World Liberty Financial (WLFI) DeFi platform significantly increased its Ether holdings by $10 million over seven days. This aligns with broader institutional movements as firms look to position themselves ahead of regulatory clarity on Ethereum-based ETFs.
A key metric that could hint at an upcoming Ethereum rally is the MVRV Z-Score, a tool used to assess whether ETH is overvalued or undervalued.
Santiment’s data shows that Ethereum’s MVRV Z-Score recently dropped to its lowest level in 17 months. Notably, the last time ETH saw similar lows was in October 2023, December 2022, and March 2020. It preceded significant bull market recoveries, with price surges as high as 160%.
Additionally, the declining total value locked (TVL) in Ethereum’s DeFi ecosystem and concerns over ETH’s supply emission rate have weighed on sentiment. However, should network activity pick up, Ethereum’s fundamentals could quickly turn bullish.
What’s Next for Ethereum?
While Ethereum’s price action remains sluggish, history suggests that extreme negativity has often been followed by sharp rebounds.
If institutional accumulation continues, macro conditions improve, and on-chain activity strengthens, Ethereum could be on the verge of a significant rally.
For patient investors, the current sentiment drop may not be a sign of weakness, but rather a buying opportunity before the next market leg up.
