Standard Chartered backs $4,000 ether as retail piles into the sub-$2,000 drop

Retail traders piled into ether ($ETH) bets even as the second-largest token dropped under $2,000 for the first time since late March, a signal some analysts say means a deeper decline is on the cards.

Social media lit up with buy-the-dip calls the moment $ETH cracked the round number, and analytics firm Santiment's gauge of bullish-versus-bearish chatter on the token ripped to a month-high of 2.4-to-1 on May 27. On Santiment's scale that sits deep in the fear-of-missing-out (FOMO) zone, where the crowd turns greedy.

The crowd, historically, is early. Retail investors rushing to buy a breakdown at a psychological support level is the kind of optimism that tends to come before more pain, not less. Santiment noted the crowd "usually gets calls wrong." The cleaner buy, by that logic, shows up when the dip-buyers stop cheering and start bleeding.

Standard Chartered, meantime, remains on the crowd's side, just with a longer horizon and a fancier analogy. Geoffrey Kendrick, the bank's digital assets research head, used a Thursday note to reaffirm a call he's held since February: ether at $4,000 by year-end and $40,000 by the end of 2030.

His pitch is that the Ethereum blockchain and its token have come apart. Transaction counts on the network and the value locked in its apps are near record highs, while ether's price has bled 57% from its August peak against the dollar and shed 37% against bitcoin.

Kendrick drew parallels to Jeff Bezos watching Amazon's stock crater from $113 to $6 in the 2001 dot-com wreckage while the business underneath kept improving. The shares have since climbed roughly 1,000-fold in the intervening quarter-century.

"$ETH will catch up to the internal metrics, it is just a matter of time," he wrote.

Standard Chartered expects the stablecoin market to grow sixfold by the end of 2028 and tokenized real-world assets to balloon fiftyfold. It reckons Ethereum carries 50% to 65% of both.

Those two buckets already make up more than half the value locked on the chain. Get to $4,000, and the ether-to-bitcoin ratio is back at its 2021 high near 0.08. It's currently around 0.03.

As such, the traders putting real money down aren't waiting for the catch-up. Ether futures open interest, the total stack of outstanding contracts, climbed to a record 16.39 million $ETH ($32.61 billion) even as the price sank. That's a warning: Open interest building while the price falls is the fingerprint of fresh shorts, not dip buyers. A holder of a short position is betting on a price drop.

Funding, the fee perpetual traders pay to hold a position, stayed flat at 0.0022%, so nobody's paying up to be long either, Coinglass data show.

So the bullish side of the $ETH trade right now is a retail crowd that usually buys too soon and a bank repeating a target it set three months ago.

Watch the crowd, not the chart. Santiment's point is that the time to buy is when the dip-buyers finally panic. Right now, they are cheering.