Ethereum has undoubtedly been under pressure despite the recent bullish rally in the broader cryptocurrency market as it struggles to make a major upside move.
Recently analysis by ShayanBTC, who contributed to the CryptoQuant QuickTake platform, shed light on key factors affect the performance of Ethereum.
In a post titled “Ethereum Faces Crossroads: Funding Levels and $3K Key Support to Sustain Bullish Momentum,” Shayan highlights the asset's struggle to maintain its upward trajectory.
Funding levels and the importance of the $3K support level
According to Shayan, Ethereum's bullish trend was greatly challenged by fluctuations in Funding Rates, a key indicator of demand in the derivatives market.
While these levels initially rose during the recent rally in the crypto market, indicating growing confidence, a subsequent decline occurred after Ethereum declined at the Level against $4,000 suggesting the interest and commitment of smaller traders.
In particular, the increase in Funding Rates during the rally indicated optimism among traders. However, the sharp decline in these levels after that indicates a declining demand for Ethereum in the derivatives market.
This move raises concerns about the sustainability of the bullish trend, especially because Ethereum is unable to break the $4,000 resistance.
The $3,000 support level has emerged as a default threshold for Ethereum. Shayan emphasized that maintaining this level is essential to stabilize the market and potentially manage bullish momentum.
A failure to hold above $3,000 could increase selling pressure, leading to a deeper market correction. The analyst wrote:
Overall, Ethereum's outlook depends on recovering higher Funding Rates and protecting $3K. These factors will determine if the market resumes its rise or if a further correction is needed.
Ethereum market performance
At the same time, Ethereum has continued to show downward trends, especially since the broader market has recently turned bearish. Over the past week, today's market value has fallen by 6.2%. bringing its price under $3,500.
However, over the past day, there has been a slight increase in the price of ETH as the asset registers a 0.9% increase. This small increase has pushed the price of ETH to above $3,200 at the time of writing marking a 33.9% decrease away from the all-time high of $4,878 recorded in November 2021.
Interestingly, despite the drop in the price of ETH in the past week, the daily trading volume of the asset has faced a different trend over the same period. Notably, ETH's daily trading volume has moved from $20 billion last Friday to now sitting at over $26 billion as of today.
Given the current trend in ETH, this is worth noting increase in trade volume that could be due to the increase in buying pressure and selling pressure that is going on in the Ethereum market.
Exclusive image created by DALL-E. Chart from TradingView
