[DigitalToday reporter Yoonseo Lee (이윤서)] With Ethereum sliding below $2,000 overnight, market analytics firm Santiment assessed that it is better to wait rather than rush into bargain-hunting until retail investor sentiment turns back to a fear zone.

On May 28 (local time), blockchain outlet The Crypto Basic reported that Santiment analysed crowd psychology in this downturn as a key variable that will determine Ethereum’s short-term buying point.

Ethereum at one point on May 28 fell below the psychological support line of $2,000. It was the first time since March 29 that the level has been broken. The day’s drop was 2.5 percent, and the decline over the past 7 days was tallied at about 6 percent. As the price slipped to $1,970, the cumulative fall since the start of the year widened to 30 percent. It was also pointed out that it has been the weakest performer this year among the top 10 cryptocurrencies by market capitalisation.

Santiment said retail reactions in such a sharp selloff tend to split into two broad paths. One is a FUD phase, where fear, uncertainty and doubt grow. In that case, negative reactions outnumber positive ones on social media. The other is a FOMO phase, where the drop is seen as a chance to buy at a low. In that phase, calls to buy the dip lead social discussion and expectations of a rebound remain.

Santiment then noted that the first path is more common. It said retail investors are more likely to tilt toward fear and turn bearish. At the same time, Santiment said it has consistently emphasised a strategy of moving against the crowd, and in such situations it viewed a rebound in Ethereum as more likely.

It warned, however, that the decline could extend if retail investors continue to treat the break below $2,000 as a buying opportunity. If “buy the bottom” views dominate on social media, the market is more likely to move against the crowd’s expectations, it said. It added that in this process market makers may try to shake out “weak hands” to secure enough liquidity, which could push prices lower until retail investors give up.

Santiment said a time when FOMO cools would be the point to consider buying Ethereum. That means a better entry zone is when pessimism deepens across the market and negative social reactions strongly outweigh positive ones.

Indicators also showed optimism has yet to fade. As of May 27, retail investor sentiment on Ethereum stood at 2.4 bullish views to 1.0 bearish, marking the highest FOMO level in the past month. With the figure above the FOMO baseline, Santiment judged on that basis that the downtrend may not be over yet.

The key point to watch, it said, is when retail sentiment drops back into the FUD zone. Santiment advised patience until the Ethereum market is driven more by fear than by the crowd’s optimism. In the end, the analysis said, more important than the break of $2,000 itself in this decline is the shift in retail investors’ psychology in accepting that price.

BREAKING: Ethereum has just seen its market value fall below $2,000 for the first time since March 29th. Traders typically react to a price plunge like this in 2 different ways: FUD takes over, retail begins to write off the token because of its under-performance. (More… pic.twitter.com/NCKuCi2rHM