Amidst the wider downturn in the global crypto market, Ethereum emerged as one of the main cryptocurrencies to be heavily affected.
Despite already being performed in the recent bull runEthereum has now seen a distinct correction, falling as low as the $3,500 price level in the past few weeks.
While this price performance from ETH may have caused investors to lose interest in Ethereum for now, recent data from the CryptoQuant platform suggests a possible reversal, with key indicators point to renewed confidence in the market.
Funding rates reflect renewed confidence among traders
CryptoQuant analyst, ShayanBTC, recently highlighted the future developments of the Ethereum market analysis titled “Ethereum Futures Market Signs of Possible Reversal After $3K Correction. “
Shayan's analysis reveals that the future funding levels, which are a sentiment gauge for traders, have shown. stability indicators after a price drop, indicating a possible recovery.
According to the analyst, Ethereum funding levels have shown an increase after the recent sharp correction, showing that there is a higher appetite among traders for long positions.
In particular, funding rates are a tool in perpetual futures contracts where traders with long positions pay off short sellers, or vice versa, depending on market sentiment. When funding levels rise, it usually indicates that traders are leaning towards a supportive outlook.
Shayan revealed that the increase in funding rates means more demand for Ethereum at the current price level, indicating that traders expect a kick back from the area $3,000.
The analyst also explained that such behavior often precedes large upward price movements, especially when combined with a a period of market consolidation. In his words:
The recent rise in funding rates indicates that buyers are coming in, which, if sustained, could lead to a major bullish rebound. This renewed buying pressure has the potential to push Ethereum towards the critical $4K 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 writing down 1.5% on the past day. This market price represents a 32.2% decline away from the all-time high (ATH) of $4,878, which was recorded in November 2021.
Interestingly despite the drop in ETH price, the asset has still seen 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 below $15 billion, but, at the time of writing, the asset's daily trading volume valuation is at $20.6 billion.
Featured image created by DALL-E, Chart from TradingView
