Amid the broader decline in the global crypto market, ethereum emerged as one of the major cryptocurrencies that has been significantly affected.
Despite having underperformed in the recent bull run, ethereum has now seen a notable correction, falling as low as below the $3,500 price level in recent weeks.
While this eth price action might have led investors to lose interest in ethereum for now, recent data from the CryptoQuant platform suggests a possible turnaround, with key indicators pointing to renewed market confidence.
Funding rates indicate renewed confidence among traders
A CryptoQuant analyst, ShayanBTC, highlighted the evolution of the ethereum futures market in a recent <a target="_blank" href="https://cryptoquant.com/insights/quicktake/677278301001ca2735869bc8-ethereum-Futures-Market-Signals-Potential-Rebound-After-3K-Correction” target=”_blank”>analysis titled “ethereum Futures Market Signals Possible Bounce After $3K Correction.”
Shayan's analysis reveals that futures funding rates, which act as an indicator of trader sentiment, have shown signs of stabilization after the price decline, suggesting a possible recovery.
According to the analyst, ethereum funding rates have shown an increase after the recent sharp correction, indicating increased appetite among traders for long positions.
<img src="https://technicalterrence.com/wp-content/uploads/2024/12/Ethereum-Market-Turns-Bullish-Funding-Rates-Hint-at-Possible-4000.png" alt="ethereum funding rates from all exchanges.” />
In particular, funding rates are a mechanism in perpetual futures contracts in which long traders pay short sellers, or vice versa, depending on market sentiment. When funding rates rise, it typically suggests that traders are leaning toward a bullish outlook.
Shayan revealed that the increase in funding rates implies increased demand for ethereum at its current price level, indicating that traders are expecting a recovery from the $3,000 region.
The analyst further explained that this behavior usually precedes significant upward price movements, especially when combined with a period of market consolidation. In his words:
The recent rise in financing rates suggests an influx of buyers that, if sustained, could fuel a substantial bullish rally. 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, at the time of the 1.5% drop in the last day. This market price marks a 32.2% decrease from its all-time high (ATH) of $4,878, recorded in November 2021.
x/x70kCD0F/” alt=”ethereum (eth) Price Chart on TradingView” />
Interestingly, despite the drop in eth price, the asset still managed to see a slight increase in trading volume over the past day.
Notably, at this time yesterday, eth's daily trading volume was sitting at a valuation of less than $15 billion; However, at the time of writing, the asset's daily trading volume valuation stands at $20.6 billion.
Featured image created with DALL-E, TradingView chart
