Ethereum Market Turns Optimistic: Funding Rates Hint At Potential $4K Comeback
Amid the general decline in the global cryptocurrency market, Ethereum has become one of the major cryptocurrencies to be significantly affected.
Despite poor performance recent bull marketEthereum has now experienced a significant correction, falling to sub-$3,500 price levels in recent weeks.
While this price performance of ETH may cause investors to temporarily lose interest in Ethereum, the latest data from the CryptoQuant platform suggests that things may be looking up, Key indicators point to renewed market confidence.
Funding rates show traders regaining confidence
CryptoQuant analyst ShayanBTC highlighted developments in the Ethereum futures market in a recent report analyze Titled “Ethereum Futures Market Signals Possible Bounce After $3,000 Correction”.
Shayan’s analysis shows that futures funding rates, an indicator of trader sentiment, have shown signs of stability Prices fell, hinting at a potential recovery.
The analyst said that after the recent sharp correction, Ethereum funding rates have increased, indicating that traders are more interested in long positions.
It’s worth noting that funding rates are a mechanism in perpetual futures contracts where traders holding long positions pay short sellers and vice versa, depending on market sentiment. When funding rates rise, it usually indicates that traders are leaning toward a bullish outlook.
Shayan revealed that the surge in funding rates means increased demand for Ethereum at current price levels, indicating that traders Looking forward to rebound $3,000 area.
The analyst further explained that this behavior often precedes significant price increases, especially with market integration period. In his words:
The recent spike in funding rates points to an influx of buyers that, if sustained, could fuel a sharp bullish rally. This renewed buying pressure has the potential to push Ethereum towards the key $4,000 resistance in the short to medium term.
Ethereum market performance
After weeks of sustained decline, Ethereum is currently trading at $3,310, down 1.5% over the past day. This market price is down 32.2% from the all-time high (ATH) of $4,878 set in November 2021.
Interestingly, despite ETH’s price decline, the asset still saw a slight increase in trading volume over the past day.
In particular, as of this time yesterday, ETH’s daily trading volume was estimated at less than $15 billion, but at the time of writing, the asset’s daily trading volume is estimated at $20.6 billion.
Featured image created using DALL-E, chart from TradingView
