- Ethereum’s funding rate signals a potential rebound for ETH.
- ETH has declined by 16.48% over the past 7 days.
Since hitting $4109, Ethereum [ETH] has experienced strong downward pressure. As such, over the past week, the altcoin has declined to a low of $3095 dropping by 16.48%.
Despite the recent dip, Ethereum seems positioned for a comeback to $3,300. This is because Ethereum’s funding rate has cooled since facing two rejections at $4k.
Ethereum’s Futures market cools after $4k rejection
According to Cryptoquant, Ethereum’s failure to reclaim the $4k resistance resulted in massive liquidations in the futures markets.
Source: Cryptoquant
This resulted in a huge market crash with ETH hitting lows. While ETH’s funding rate surged last week, the altcoin’s failure to hold above $4k brought the funding rate back to healthy levels. These levels are well suitable for a bullish trend.
Therefore, the cooling effect from this could potentially pave the way for a more sustainable rally in the coming weeks.
Historically, such a pattern occurred in January 2024 when the drop in funding rates cooled the futures market strengthening ETH for a major uptrend.
During this rally, Ethereum rallied from $2169 to $4091. This historical precedent indicates that the current market reset could mark the beginning of another bullish phase.
What ETH charts suggest
While Ethereum has experienced strong downward pressure over the past week, the prevailing market conditions point towards recovery.
Source: Santiment
For starters, Ethereum’s stock-to-flow ratio has surged over the past week from 2.19 to 24.67. When SFR rises it implies that ETH has become more scarce amidst increased accumulation by large holders.
As such, the altcoin has become more scarce. Coupled with rising demand, this pushes prices up through supply squeeze.
Source: Santiment
Additionally, the Ethereum MVRV Z score ratio has declined over the past week to 0.745. When the MVRV score hits such low levels, it signals ETH is currently undervalued providing a good signal for accumulation among long-term holders.
This trend has been witnessed over the past week with whales turning to buy the dip. Increased accumulation usually creates a higher buying pressure which causes upward pressure on prices through high demand.
Source: Santiment
Finally, Ethereum’s Bitmex basis ratio has surged over the past few days from -0.22 to 0.07. When this ratio turns positive, it reflects optimism in the futures market as traders expect prices to rise after the dip.
Is a comeback likely?
As observed above futures market is bullish and expects ETH prices to recover. Equally, the spot demand for Ethereum is constantly rising creating healthy conditions for price gains.
Read Ethereum’s [ETH] Price Prediction 2024-25
With the market optimistic, ETH could recover from the $3300 dip and reclaim higher resistance. If these conditions hold, ETH will reclaim the $3700 resistance.
A move from here could strengthen Ethereum to move towards $3900. However, with bears still strong, if bulls fail to retake the market, ETH will drop to $3160.
