Ethereum (ETH) will reclaim $3,000 if this happens

Ethereum (ETH), the second-largest cryptocurrency, has failed to climb back above $3,000 since early August. However, things could be looking up for the asset again.

An analyst at blockchain analytics platform CryptoQuant has shared a chart explaining how a continued influx of liquidity into the Ethereum futures market could elevate the largest altcoin.

Funding rates expected to drive ETH price rebound

According to the analyst, the perpetual futures market contributes to the price movement of the underlying digital assets. More buying actions in the futures market indicate investor interest in the crypto asset, thus projecting its value to higher prices. Conversely, more selling actions are then accompanied by a price decline.

The chart above shows the moving average of Ethereum’s funding rates, an indicator used to determine whether futures traders are buying or selling. Over the past 30 days, ETH’s funding rates reveal that futures traders have been gradually shifting toward more buying activity than selling, indicating that they are more bullish on the second-largest crypto asset.

But there is a catch

While the CryptoQuant analyst expressed optimism that ETH could unlock higher prices, he revealed that there was a catch:

“For Ethereum to continue its recovery and target higher price levels, demand in the perpetual futures market must continue to increase in the coming weeks. A sustained uptrend in funding rates could lead to further price gains in the medium term.”

This implies that ETH perpetual futures traders should remain optimistic that the leading altcoin will gain traction. Any significant downside in the funding rate metric will stall ETH’s price in the short term.

Meanwhile, ETH continues to trade around $2,600, representing a 16% price drop from early August when the asset sold for $3,100. The cryptocurrency’s price has remained in this range for nearly two months despite continued outflows from the Ethereum exchange-traded fund (ETF) spot market in the United States.