Ethereum funding rates point to $4K recovery potential

Ethereum (CRYPTO:ETH) has recently faced significant price corrections, dropping below $3,500 amid a broader crypto market decline.

Despite this downturn, data from CryptoQuant indicates a possible recovery, with funding rates suggesting renewed market confidence.

CryptoQuant analyst ShayanBTC, in an analysis titled “Ethereum Futures Market Signals Potential Rebound After $3K Correction,” observed that Ethereum's futures funding rates have stabilised after the recent drop.

According to Shayan, this signals a growing interest among traders to take long positions on Ethereum, reflecting a bullish sentiment in the market.

Funding rates in perpetual futures contracts often act as a sentiment gauge, with rising rates typically indicating traders’ optimism.

“The recent spike in funding rates suggests an influx of buyers, which, if sustained, could drive a substantial bullish rebound,” Shayan explained.

He added that this buying pressure might propel Ethereum toward the $4,000 resistance in the short to mid-term.

Despite the price correction, Ethereum's trading volume has increased significantly over the past day, rising from below $15 billion to $20.6 billion.

This stabilisation in funding rates, combined with increased trading activity, points to a possible consolidation phase.

Such periods often precede upward price movements, offering a glimmer of hope for investors eyeing Ethereum’s recovery.

Market watchers remain focused on Ethereum’s ability to sustain its current momentum, which could pave the way for a return to the $4,000 price level. 

As one of the major cryptocurrencies, Ethereum’s performance continues to be a critical indicator of broader market trends.

At the time of reporting, the Ethereum price was $3,334.77.