Ethereum, the second-largest cryptocurrency by market capitalization, has been struggling to reclaim the $3,000 price level since early August. Throughout September, Ethereum has mostly remained below $2,600, but this week saw a glimmer of hope for investors as it finally broke above the $2,600 threshold.
With this resistance level now breached, the focus is on a potential continued surge towards the $3,000 price level. An analysis on the CryptoQuant platform highlights a potential catalyst for this upward movement, pointing to an emerging bullish trend in Ethereum’s funding rates as a significant driver.
Bullish Shift in Funding Rates
According to an ETH analysis on CryptoQuant by ShayanBTC, Ethereum’s 30-day moving average of funding rates has shown a slight but noticeable bullish shift after a prolonged decline. This change indicates that traders are regaining confidence in Ethereum’s price performance, especially following the recent Fed interest rate cut.
ETH funding rates refer to the periodic payments made between traders to keep the price of perpetual futures contracts close to the cryptocurrency’s spot price. A positive shift in funding rates often suggests a dominance of long positions, leading to upward price pressure.
The analyst emphasized the importance of funding rates, particularly in light of a potentially bullish fourth quarter. It was noted that for Ethereum to sustain its recovery and aim for higher price levels, demand in the perpetual futures market must continue to rise in the coming weeks. A slight decline in funding rates could trigger a loss of bullish momentum.
Ethereum Eyeing a Return to $3,000?
Ethereum’s recent breakout above $2,600 signals a significant shift in market sentiment. After weeks of trading below, the $2,600 level now appears to be a crucial support zone for the cryptocurrency. This breakout sets the stage for Ethereum’s potential return to $3,000, with funding rates playing a vital role in this scenario.
Currently, Ethereum is trading at $2,610 and has seen an 8% increase over the past seven days. This price surge is particularly notable considering the low of $2,171 on September 6, reflecting a 20% rise since then.
The positive sentiment surrounding Ethereum is also gaining traction among institutional investors, as reflected through Spot Ethereum ETFs. Flow data indicates a shift from a net outflow of $79.3 million on Monday to consecutive inflows of $62.5 million and $43.2 million on Tuesday and Wednesday. The combined influx could significantly impact Ethereum’s ability to surpass the $3,000 price level and maintain it in the upcoming weeks.
Featured image created with Dall.E, chart from Tradingview.com