Ethereum Price Sentiment Sinks Again: History Says That’s When Rallies Start

Ben Graham · January 12

Sentiment for the number two digital asset, ETH, just reached levels that 99Bitcoins analysts say often precede major price runs. The Ethereum price is currently trading between $3,100 and $3,200, up +2% in the past 24 hours as traders step in to buy following last week’s minor pullback.

The Ethereum price movements come as the broader crypto market cap reclaimed $3.2 trillion, surging +1.2% in the past 24 hours. Bitcoin briefly topped $92,000 before slipping to $91,500 as European markets opened on Monday morning.

However, market fear remains significant, as the fear-and-greed index fell to 27 from 29 yesterday. In past cycles, deep pessimism has marked moments when sellers run out of steam. I still remember June 2022, when sentiment around ETH had never been lower after it slipped below $1,000, before it more than doubled over the eight months that followed.

That matters now as investors debate whether Ethereum lags or quietly resets for another move. Macro pressure still shapes the backdrop. Rate uncertainty and rotation toward faster chains keep short-term nerves high.

Crypto Fear and Greed Chart

All time 1y 1m 1w 24h

What Does “Low Sentiment” Actually Mean for the Ethereum Price?

Market sentiment reflects how people feel about a particular asset across social media, trading behavior, and derivatives data. When sentiment sinks, most traders expect prices to fall with it.

According to Santiment, Ethereum sentiment now sits near levels observed during prior rallies. The reason is simple. When most people have already sold or gone short, selling pressure abates.

This knowledge helps beginners avoid a classic mistake. Many sell when fear peaks, even though history shows fear often marks turning points in the market.

A clear example, as illustrated by Santiment, is the period from September 2024 to December 2024. Ethereum price sentiment throughout September was low, as traders observed ETH decline from $3,900 in March 2024 to $2,350 by the end of August 2024.

While traders spent the entire month of August calling for Ethereum to fall below $2,000, sellers became exhausted, and ETH surged +70% to $4,000 over the next two months.

This is a key example of how assets tend to fly when sentiment is in the gutter and inexperienced traders continue to call for outlandish downside targets even when it becomes clear that sellers are dwindling.

Ethereum sentiment has declined to year-low levels as the asset has underperformed relative to other top caps. For those patiently holding their $ETH, the bearishness being projected across social media is a good sign of a potential turnaround once crypto markets stabilize. pic.twitter.com/iRaKTvb0Tu

— Santiment (@santimentfeed) March 6, 2025

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Why Traders Watch Pessimism as a Signal

Santiment data also shows clusters of heavy short positions often appear near Ethereum price bottoms. Shorting means betting on price drops, and when too many traders crowd into that bet, a bounce can lead to mass liquidations and provide the fuel for an explosive move to the upside.

This is known as a short squeeze. Price jumps occur when traders rush to exit losing bets, and similar scenarios have often preceded Ethereum rebounds.

Whale behavior adds another layer. When major players begin buying or selling large volumes of an asset, it can trigger a cascading effect in which smaller traders follow suit.

(SOURCE: Bitfrog.io)

One Hyperliquid whale has just opened an $11M Ethereum long at $3,163 with 25x leverage, and worryingly, the liquidation price is just $3,033. The whale is currently -$114,000 in the red, with the Ethereum price just over $3,100.

While this highlights confidence from major players by holding ETH with sentiment at its lows, the use of such high leverage makes the position more of a gamble than it needs to be. That $3,033 liquidation price could easily be triggered before an explosive breakout to the upside, while lower leverage would have given the whale a much safer liquidation price.

Ethereum Price and the Bigger Story Yet to Play Out

While Ethereum faces competition from faster and cheaper chains, it remains the primary settlement layer for cryptocurrency. Layer-2 networks handle cheaper transactions while ETH secures the base layer. That supports long-term demand for Ethereum.

Institutional interest also stays in focus. Products like spot ETFs and staking vehicles keep ETH on the radar of traditional investors. We covered this trend in our breakdown of institutional Ethereum interest.

ETH ETFs are on a three-day skid, with a combined $350M in outflows from January 7 to 9. This aligns with the current sentiment around ETH, as investors are feeling fear and exiting riskier plays, such as digital asset ETFs.

(SOURCE: CoinGlass)

The Ethereum price also cycles through extended consolidation phases. That tests patience and tempts emotional trades. Never treat sentiment as a buy signal by itself.

A safer approach uses position sizing. Purchasing small amounts over time can help to reduce stress if the price drops again. Ethereum sentiment sits in the fear zone again. History says that it is often when long-term setups quietly form. For beginners, the real edge comes from staying calm while others panic.

For everyday investors, sentiment extremes act like weather warnings. They don’t predict exact prices, but they serve as indicators of the market’s likely direction.

Low sentiment does not guarantee a rally; macroeconomic shocks or regulatory news could still push ETH lower. Cryptocurrencies move quickly and ignore technical patterns when real-world factors begin to affect global markets.

President Trump continues to threaten an invasion of Greenland, and fresh reports that the Department of Justice is investigating the current SEC chair, Jerome Powell, are just two catalysts that could cause further downside across the markets.

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