Ethereum has dropped below $2,000, and a recent market analysis highlighted the ideal time to start buying the current dip.
The Santiment analysis identified possible reactions to this drop among retail traders, each providing a different timeline for DCAing or gaining fresh exposure to Ethereum (ETH). The outlook focuses on their behavior amid the dip and playing contrarian to it.
Key Points
- Ethereum fell below the psychological $2,000 price level for the first time since March 29th.
- Santiment has analyzed two different ways that market traders react to such a dip.
- In the first case, FUD dominates market sentiments, signaling a possible bottom signal.
- In the other case, FOMO and optimism kick in, possibly pushing Ether further lower.
- The best opportunities come when the FOMO has cooled down.
Bears Break Psychological $2,000 Ethereum Price Level
Crypto bears have taken full control of the market again. Earlier on Thursday, they pushed Ethereum below the psychological $2,000 price level for the first time since March 29th.
Today alone, the coin is down 2.5%, bringing its weekly decline to 6%. The pullback to $1,970 further extends Ether’s year-to-date loss to 30%, the worst in the top 10 cryptocurrency ranking by market cap.
Amid the drop, Santiment has analyzed two different ways that market traders react to such a dip. In the first case, fear, uncertainty, and doubt (FUD) dominate market sentiments, with negative social media comments outpacing the positive ones.
In the other case, fear of missing out (FOMO) kicks in, with retail traders sharing views that the dip is an opportunity to buy at a discounted price. This keeps optimism of a rebound alive and social media comments positive.
How Each Sentiment Will Affect the Market
Santiment suggested that the FUD path is more common. Retail traders are more likely to panic and turn bearish on Ethereum. Meanwhile, as the platform has always preached, it is best to bet against the crowd. In this case, it sees Ether most likely rebounding.
However, retailers could still take the lesser common path and remain optimistic. Here, calls of “buy the dip” dominate social conversations, and they see the drop below $2,000 as an opportunity.
In this scenario, Santiment suggests the market might fall further as the crowd always get their calls wrong. Moreover, market makers aim to shake out as many weak hands as possible to grab sufficient liquidity for a strong reversal. As such, prices could continue dropping until retail traders give up.
Ideal Time to Buy Ethereum
When the FOMO cools down, Santiment suggests it is time to start buying Ethereum. According to the analysis, the best opportunities come when “there is true blood in the streets.” In this environment, negative social comments have far outweighed positive comments.
An accompanying chart shows that on May 27th, Ethereum retail traders had a month-high FOMO of a 2.4 bullish to 1.0 bearish comment ratio. This pushed the sentiment above the “FOMO zone,” with Santrimet suggesting the dip might not be over yet.
Until Ether’s crowd sentiment drops back to the FUD zone, dominated by crowd fear, the market intelligence platform advises patience.
