Ethereum (ETH) will recover $3,000 if this happens

ethereum (eth), the second-largest cryptocurrency, has failed to reclaim the $3000 price mark since early August. However, things might start looking positive for the asset once again.

An analyst at blockchain analytics platform CryptoQuant has shared a chart explaining how continued cash flow into the ethereum futures market could push the largest altcoin higher.

Funding rates will boost eth price rally

According to the analyst, the perpetual futures market contributes to the price movement of the underlying digital assets. More buying actions in the futures market indicate investors' interest in the crypto asset, which projects its value to higher prices. On the contrary, more selling actions are subsequently accompanied by a price decline.

The chart above shows the moving average of ethereum funding rates, an indicator used to determine whether futures traders are buying or selling. Over the past 30 days, eth funding rates reveal that futures traders have gradually leaned towards more buying activities than selling, indicating that they are more bullish on the second-largest crypto asset.

But there is a catch

While the CryptoQuant analyst expressed optimism that eth could unlock higher prices, he revealed that there is a catch:

“For ethereum to continue its recovery and target higher price levels, demand in the perpetual futures market must continue to increase in the coming weeks. A sustained upward trend in funding rates could drive further price increases in the medium term.”

This implies that eth perpetual futures traders must maintain a bullish attitude for the leading altcoin to gain momentum. Any significant drop in the funding rate metric will stagnate the eth price in the short term.

Meanwhile, eth continues to trade around $2,600, which represents a 16% price decline from early August when the asset was selling for $3,100. The cryptocurrency’s price has remained in this range for nearly two months despite continued outflows in the U.S. spot ethereum exchange-traded fund (ETF) market.

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