In the context of the broader decline of the global cryptocurrency market, Ethereum has emerged as one of the major cryptocurrencies that has been significantly impacted.
Despite having already underperformed in the recent bull run, Ethereum has now undergone a notable correction, falling below the $3,500 price level in recent weeks.
While this ETH price performance may have led investors to lose interest in Ethereum for now, recent data from the CryptoQuant platform suggests a possible trend reversal, with key indicators pointing towards renewed market confidence.
Financing rates indicate renewed confidence among traders
A CryptoQuant analyst, ShayanBTC, highlighted developments in the Ethereum futures market in a recent analysis titled “Ethereum Futures Market Signals Potential Rebound After $3,000 Correction.”
Shayan’s analysis reveals that futures funding rates, which serve as a sentiment indicator for traders, showed signs of stabilization after the price decline, suggesting a potential recovery.
According to the analyst, Ethereum funding rates have shown an increase after the recent sharp correction, indicating greater appetite among traders for long positions.
In particular, funding rates are a mechanism in perpetual futures contracts in which traders holding long positions pay short sellers, or vice versa, depending on market sentiment. When financing rates rise, this typically suggests that traders tend to have a bullish outlook.
Shayan revealed that the surge in funding rates implies an increase in demand for Ethereum at its current price level, signaling that traders expect a rebound from the $3,000 region.
The analyst further explained that such behavior often precedes significant upward price movements, particularly when combined with a period of market consolidation. In his words:
The recent increase in financing rates suggests an influx of buyers which, if sustained, could lead to a substantial bullish rebound. This renewed buying pressure has the potential to push Ethereum towards the crucial $4,000 resistance in the short to medium term.
Ethereum market performance
After weeks of steady decline, Ethereum is currently trading at a price of $3,310, as it depreciated 1.5% over the past day. This market price marks a decline of 32.2% from its all-time high (ATH) of $4,878, recorded in November 2021.
Interestingly, despite the drop in ETH price, the asset still managed to register a slight increase in trading volume over the past day.
Notably, at this time yesterday, ETH’s daily trading volume amounted to a valuation of less than $15 billion, however, as of this writing, the asset’s daily trading volume valuation amounts to 20.6 billion dollars.
Featured image created with DALL-E, chart from TradingView