Retail traders piled into ether (ETH) bets even as the second-largest token fell below $2,000 for the first time since late March, a sign that some analysts say means a deeper drop is coming.
Social media lit up with buy-on-dips calls the moment ETH broke the round number, and analytics firm Santiment’s gauge of bullish versus bearish talk on the token hit a monthly high of 2.4-to-1 on May 27. On the Santiment scale, that’s deep in the fear of missing out (FOMO) zone, where people get greedy.
The crowd, historically, arrives early. Retail investors rushing to buy a breakdown to a psychological support level is the type of optimism that tends to precede more pain, not less. Santiment noted that the crowd “normally receives calls poorly.” The cleanest buying, according to that logic, appears when dip buyers stop cheering and start bleeding.
Meanwhile, Standard Chartered remains on the side of the crowd, only with a broader horizon and a more sophisticated analogy. Geoffrey Kendrick, head of digital asset research at the bank, used a note on Thursday to reaffirm a forecast he has maintained since February: ether at $4,000 by the end of the year and $40,000 by the end of 2030.
Their argument is that the Ethereum blockchain and its token have collapsed. The transaction count on the network and the value locked in its applications are near record levels, while the price of ether has lost 57% from its August high against the dollar and 37% against bitcoin.
Kendrick drew parallels with Jeff Bezos watching Amazon’s stock fall from $113 to $6 in the dot-com disaster of 2001, while the underlying business continued to improve. Since then, the stock has risen roughly 1,000-fold in the intervening quarter century.
“ETH will catch up with internal metrics, it’s just a matter of time,” he wrote.
Standard Chartered expects the stablecoin market to grow six-fold by the end of 2028 and real-world tokenized assets to grow fifty-fold. He estimates that Ethereum represents between 50% and 65% of both.
Those two buckets already represent more than half of the value locked on the chain. Hit $4000 and the ether-bitcoin ratio will return to its 2021 high, near 0.08. It is currently around 0.03.
As such, traders investing real money are not waiting to catch up. Ether futures open interest, the total stack of outstanding contracts, rose to a record 16.39 million ETH ($32.61 billion), even as the price tanked. That’s a warning: the creation of open interest as the price falls is the fingerprint of new short positions, not buyers on the decline. The holder of a short position bets on a fall in price.
Funding, the fee perpetual traders pay to hold a position, held steady at 0.0022%, so no one is paying to be long either, Coinglass data shows.
So the bullish side of ETH trading right now is a retail public typically buying too early and a bank repeating a target it set three months ago.
Look at the crowd, not the chart. Santiment’s point is that the time to buy is when buyers finally panic. Right now they are applauding.
