Ethereum has undoubtedly been under pressure despite the recent bullish rally in the broader cryptocurrency market, as it struggles to make a major upward move.
A recent analysis by CryptoQuant QuickTake platform contributor ShayanBTC shed light on key factors impacting Ethereum performance.
In an article titled “Ethereum faces a crossroads: Funding rates and $3,000 support are key to maintaining bullish momentum,” Shayan highlights the asset’s struggles to maintain its upward trajectory.
Funding Rate and Significance of the $3,000 Support Level
According to Shayan, Ethereum’s bullish momentum has been significantly challenged by fluctuations in funding rates, a key indicator of demand in the derivatives market.
Although these rates initially increased during the recent crypto market rally, signaling growing confidence, there was a subsequent decline following Ethereum’s rejection at the $4,000 resistance level, suggesting a reduction in the interest and commitment of traders.
Notably, the rise in funding rates during the rally highlighted cautious optimism among traders. However, the sharp decline in these rates thereafter highlights a decline in demand for Ethereum in the derivatives market.
This change raises concerns about the sustainability of the uptrend, especially in light of Ethereum’s inability to break through the $4,000 resistance.
The $3,000 support level has become a crucial threshold for Ethereum. Shayan stressed that maintaining this level is crucial to stabilizing the market and potentially restarting bullish momentum.
Failure to sustain the price above $3,000 could trigger increased selling pressure, leading to a deeper market correction. The analyst wrote:
Overall, Ethereum’s outlook depends on reclaiming higher funding rates and defending $3,000. These factors will determine whether the market will resume its uptrend or face further corrections.
Ethereum Market Performance
Meanwhile, Ethereum has continued to demonstrate downward movements, especially as the market as a whole has recently turned bearish. Over the past week, Ethereum’s market value has fallen by 6.2%, bringing its price below $3,500.
However, over the past day, the price of ETH has increased slightly, with the asset seeing an increase of 0.9%. This slight increase pushed the ETH price above $3,200 at the time of writing, a 33.9% decline from its all-time high of $4,878 recorded in November 2021.
Interestingly, despite the ETH price falling over the past week, the asset’s daily trading volume has seen an opposite trend over the same period. Notably, ETH’s daily trading volume increased from $20 billion last Friday to over $26 billion as of today.
Considering the current trend of ETH, it is worth noting that this increase in trading volume may be a result of the increased buying pressure and selling pressure ongoing in the Ethereum market .
Featured image created with DALL-E. TradingView chart
