Amid the broader decline in the global crypto market, Ethereum has emerged as one of the main cryptocurrencies that has been significantly affected.
Despite being currently in The recent bullEthereum has now experienced a significant correction, dropping below the $3,500 price level in recent weeks.
While this price action from Ethereum may have caused investors to lose interest in Ethereum for now, recent data from the CryptoQuant platform suggests a possible turnaround. Key indicators that point to renewed market confidence.
Funding rates reflect renewed confidence among traders
One of CryptoQuant's analysts, ShayanBTC, highlighted future Ethereum market developments in a recent report. Analysis Titled “Ethereum Futures Market Signals Possible Retracement After $3K Correction.”
A worthwhile analysis has shown that future funding rates act as a gauge of traders' sentiment. Signs of stabilization After the price decline, it hints at a potential recovery.
According to the analyst, Ethereum funding rates have increased after the recent sharp correction, indicating more traders are willing to take long positions.
Notably, funding rates are a mechanism in perpetual futures contracts where traders with long positions pay short sellers or vice versa depending on market sentiment. When funding rates rise, it usually indicates that traders are leaning towards a bullish outlook.
Shayan revealed that the jump in funding rates indicates increased demand for Ethereum at its current price level, indicating that traders Expect a comeback From the $3000 area
The analyst also explained that such behavior often precedes significant upward price movements, especially when coupled with a Market integration period. In his words:
The recent jump in financing rates suggests an influx of buyers, which, if sustained, could lead to a significant upside return. This rebuying pressure has the potential to push Ethereum towards the critical $4K resistance in the short to medium term.
Ethereum market performance
After weeks of steady declines, Ethereum is currently trading at $3,310, down 1.5% on the previous day. This marks the market price down 32.2% from its all-time high (ATH) of $4,878 recorded in November 2021.
It is interesting to note that despite the decrease in the price of Ethereum, this asset was still able to have a slight increase in trading volume in the past day.
Notably, as of yesterday, ETH's daily trading volume was valued at less than $15 billion, however, at the time of writing, the asset's daily trading volume is valued at $20.6 billion.
Featured image created with DALL-E, chart from TradingView
