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 signal some analysts say means a deeper decline is in store.
Social media lit up with dip buy calls the moment ETH cracked the round number, and analytics firm Santiment’s gauge of bull versus bear talk on the token hit a monthly high of 2.4-to-1 on May 27. On the Santiment scale which lies deep in the fear of missing out (FOMO) zone, where the crowd becomes greedy.
The crowd, historically, is early. Retail investors rushing to buy a breakdown with a level of psychological support are the kind of optimism that tends to precede more pain, not less. Santiment noted that the crowd “usually gets wrong calls.” Cleaner buying, according to this logic, appears when declining buyers stop cheering and start bleeding.
Standard Chartered, meanwhile, remains on the public side, just with a longer horizon and a more sophisticated analogy. Geoffrey Kendrick, the bank’s head of digital assets research, used a Thursday note to reaffirm a position he has held since February: ether at $4,000 by the end of the year and $40,000 by the end of 2030.
His argument is that the Ethereum blockchain and its token have become disjointed. The number of transactions on the network and the value locked in its applications are near record highs, while the price of ether has lost 57% from its August peak against the dollar and has fallen 37% against bitcoin.
Kendrick drew a parallel to Jeff Bezos who watched Amazon shares crater from $113 to $6 during the dot-com crash of 2001, while the underlying business continued to improve. Since then, shares have risen roughly 1,000 times over the past 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 sixfold by the end of 2028 and real-world token assets to grow fiftyfold. He estimates that Ethereum represents 50-65% of both.
These two buckets already represent more than half of the value locked on the chain. Reach $4,000 and the ether/bitcoin ratio returns to its 2021 high, near 0.08. It is currently around 0.03.
As such, traders investing real money are not waiting for the catch-up. Open interest on Ether futures, the total stack of outstanding contracts, soared to a record 16.39 million ETH ($32.61 billion), even as the price fell. This is a warning: Creating open interest as the price declines is the fingerprint of new shorts, not dip buyers. The holder of a short position bets on a fall in prices.
Funding, or the fees perpetual traders pay to hold a position, remained stable at 0.0022%, so no one is paying to be long either, according to Coinglass data.
So the bullish side of ETH trading right now is due to a retail audience generally buying too early and a bank repeating a target it set three months ago.
Look at the crowd, not the record. Santiment’s view is that the time to buy is when dip buyers eventually panic. Right now, they’re applauding.
