Amid the broader decline in the global cryptocurrency market, Ethereum has emerged as one of the major cryptocurrencies to be significantly affected.
Although it had already underperformed in the recent uptrend, Ethereum has now seen a notable correction, falling below the $3,500 price level in recent weeks.
While this price performance from ETH may have led to investors losing interest in Ethereum for the time being, recent data from the CryptoQuant platform indicates a potential turnaround, with key indicators pointing to renewed market confidence.
Funding rates indicate renewed confidence among traders
CryptoQuant analyst, ShayanBTC, highlighted recent Ethereum futures market developments. analysis Titled “Ethereum Futures Market Signals Possible Rebound After $3K Correction.”
Cheyenne’s analysis reveals that futures funding rates, which serve as a gauge of trader sentiment, showed signs of stabilizing after prices fell, indicating a potential recovery.
According to the analyst, Ethereum funding rates showed an increase after the recent sharp correction, indicating increased appetite among traders for long positions.
Notably, funding rates are a mechanism in perpetual futures where traders holding long positions pay short sellers, or vice versa, depending on market sentiment. When financing rates rise, it usually indicates that traders are leaning toward bullish expectations.
Cheyenne revealed that the rise in funding rates means increased demand for Ethereum at its current price level, indicating that traders are anticipating a bounce back from the $3,000 area.
The analyst further explained that such behavior often precedes significant upward price movements, especially when combined with a period of market consolidation. In his words:
The recent rise in financing rates indicates an influx of buyers, which, if sustained, could lead to a significant bullish rebound. This renewed buying pressure has the potential to push Ethereum towards the crucial $4K resistance in the short to medium term.
Ethereum market performance
After weeks of continuous decline, Ethereum is currently trading at $3,310, at the time of writing up 1.5% in the past day. This market price represents a decline of 32.2% away from the all-time high (ATH) of $4,878, which was recorded in November 2021.
Interestingly, despite the decline in ETH price, the asset still managed to see a slight increase in trading volume in the past day.
In particular, as of this time yesterday, ETH’s daily trading volume stood at a valuation of just under $15 billion, however, at the time of writing, the asset’s daily trading volume had a valuation of $20.6 billion.
Featured image created with DALL-E, chart from TradingView