Ethereum (ETH) may be nearing the end of a price correction as the second-largest cryptocurrency by market capitalization continues to trade just above $4,000 after a forceful sell-off last week when it almost fell to $3,400.
The Ethereum price correction may be over
According to a CryptoQuant Quicktake post by contributor PelinayPA, Ethereum funding rates on the Binance cryptocurrency exchange remain positive despite being within a narrow range. This shows that long ETH positions still dominate the market.
ETH funding rates variables usually on Binance – despite the recent extraordinary rally in digital asset prices – means that futures traders are not showing the greed or euphoria usually associated with the mid-phase of a robust uptrend.
For example, during the 2021-2022 bull market, ETH funding rates often rose to 0.1-0.2%, matching the highest levels in the local market. Currently, these financing rates hover around 0.01% to 0.03%, which means that the market has not yet reached the level of overheating.
Moreover, the absence of negative financing rates confirms the decline in brief positions and increased risk appetite among investors. CryptoQuant analyst added:
The overall trend remains upwards. Low financing rates combined with forceful price momentum suggest that the correction is likely over. In the brief term, it would be natural to take tiny profits or sideways consolidate in the $3,600-$3,800 range. If funding rates gradually rise above 0.05%, it could signal long positions are oversubscribed and trigger a short-term pullback.
The current combination of moderate leverage levels and gradually increasing spot demand indicates a potential upside for ETH, in the $4,500 to $5,000 range in the long term. The target price may be even higher given the favorable structure of derivatives and financing dynamics.
That said, a pointed raise in funding rates can be seen as an early warning of another cryptocurrency price drop. However, the ETH market structure still supports a potential rise to $6,800 by the end of 2025, the analyst concluded.
ETH ready for modern heights?
Several indicators point to ETH looking to return to its upward momentum. For example, ETH’s Spent Output Profit Rate (SOPR) has recently seen a trend he suggested towards increasing the value of digital assets to $5,000 in the near future.
Moreover, ETH exchange reserves continue to decline at a rapid rate. Latest stock market data can be seen that ETH reserves on exchanges have reached their lowest level in many years, which increases the risk of an imminent “supply collapse” of the cryptocurrency.
That said, there are several other factors that can fuel another ETH sell-off, pushing its price back below $4,000. At press time, ETH is trading at $4,053, up 0.2% in the last 24 hours.
Featured image from Unsplash, charts from CryptoQuant and TradingView.com
