With Ethereum conquering a three-month peak, recent analysis has highlighted changing social sentiments and near-term price outlook.
Ethereum, the second-largest cryptocurrency by market cap, has stunned bears lately with its recovery. It has surged 6% and 42% in the past 24 hours and seven days, outperforming most high caliber assets in these timeframes.
Interestingly, the rally is a contrarian play considering the recent prevalent bearish sentiments around the Ethereum ecosystem. Meanwhile, an analysis from the intelligence platform Santiment highlighted what things looked like sentiment-wise and possible price action.
Noise Around Ethereum Tuning Down
Ethereum’s poor start to the year has seen market sentiments predominantly bearish. For perspective, the asset dumped 58% from an opening of $3,330 to $1,383 in April, putting in an underwhelming performance compared to its peers.
With the sideways trend, bearish calls on Ethereum spiked considerably. Santiment shared that the FUD around the coin spiked to its highest level this year between May 6 and 7. This came as Ether was unresponsive to a broader market recovery, as market watchers expected.
However, the altcoin king spiked 21% on May 8 to reclaim $2,000 and extended its grasp above the level with a 6% rally the next day. Notably, this change of event saw retailers quickly switch from bearish sentiments to fear of missing out (FOMO).
Social Sentiments on Ethereum
Furthermore, another indicator confirmed the growing interest in Ethereum. Data from Google Trends shows that the search for “Etherium” surged in recent days, suggesting that retail traders are slowly noticing the asset’s renewed bullishness.
Meanwhile, this quick sentiment turnaround reflects the irrationality in the crypto space, as retail investors seem focused on an asset’s short-term price action rather than its underlying long-term prospects.
What’s Next for Ethereum?
With the growing hype, Santiment noted that past data shows that overhype around Ethereum has historically followed a sharp correction. Nonetheless, it stressed that the attention around the coin has yet to reach such levels but warned of close monitoring.
Further, growing Ethereum prices come with traction and increased network activities. Santiment emphasized that growing utility could spike Ether’s transaction fees, which have been relatively low considering its high standards.
Currently at an average of $1.57, its transaction fee fell far below the over $7 seen six months back. Meanwhile, the analysis suggested that a spike above $2 could spell the end of this recent momentum.
Additionally, Ethereum’s average 30D return stands at +32.5%, far above the “rule of thumb +15% danger zone” Santiment recommends for altcoins. While this does not suggest a price recline, it implies that Ether’s price pace may dwindle or halt in the next 30 days.
Nonetheless, Santiment insisted that Ethereum’s long-term trajectory looks solid and prices might reclaim $3,000 by June. However, it tied the price mark to Bitcoin’s rally to $110,000.
At the time of writing, Ethereum trades at $2,599.
