Ethereum Plummets 20% in a Month Amidst Bearish Sentiment and Institutional Buying

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has experienced a significant price decline, dropping over 20% in the past month. This downturn has been accompanied by a notable decrease in social sentiment, reaching its lowest point of the year. The price of ETH has fallen to around $2,176, while Bitcoin, the largest cryptocurrency, has only seen a 10% decrease in the same period. This disparity has contributed to the negative sentiment observed across various social media platforms.

Data from blockchain analytics firm Santiment indicates that discussions about Ethereum on platforms such as X (formerly Twitter), Reddit, and Telegram have shifted from the bullish sentiment seen during last year’s crypto bull market to a current bearish outlook. This shift began after September and has continued to worsen, with traders expressing pessimism about the future of ETH.

Market experts suggest that this extreme bearish sentiment could actually be a positive signal. Historically, periods of intense pessimism have often coincided with market bottoms, as price movements tend to lead sentiment rather than follow it. Mike Cahill, CEO of Douro Labs, emphasized the importance of separating short-term market narratives from long-term fundamentals. He believes that if crypto markets find stability, Ethereum is well-positioned to benefit from renewed liquidity and continued institutional interest.

This view is shared by Dominick John, an analyst at Kronos Research. John points out that while Ethereum’s recent performance may discourage short-term investors, extreme negativity often signals the bottom of a market cycle. Several factors could help trigger an ETH price recovery, including decreasing interest rates or clearer regulatory developments around staking ETH within ETFs. John also noted the continued buying by institutional players as a positive sign.

One example of institutional interest comes from World Liberty Financial (WLFI), a DeFi platform. WLFI has reportedly increased its Ethereum holdings by $10 million over a seven-day period, signaling growing long-term confidence in the asset. Technical indicators also provide some hope for ETH holders. Ethereum’s MVRV Z-Score, which helps assess whether the token is overvalued or undervalued, has dropped to its lowest level in 17 months. The last time this score hit similar lows was in October 2023, just before ETH rebounded by almost 16