Ethereum has undoubtedly been under pressure despite the recent rally in the broader cryptocurrency market as it struggles to make any major move higher.
Recent analysis by ShayanBTC, a contributor to the CryptoQuant QuickTake platform, shed featherlight on the key factors affecting Ethereum’s performance.
In a post titled “Ethereum is at a crossroads: funding rates and a $3k support key. dollars to maintain bullish momentum” Shayan highlights the asset’s efforts to maintain its upward trajectory.
Funding rates and the importance of the support level of PLN 3,000 USD
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.
While these rates initially rose during the recent cryptocurrency market rally, signaling growing confidence, there was another decline following Ethereum’s rejection at the $4,000 resistance level, suggesting reduced investor interest and commitment.
Notably, the acute rise in funding rates during the bull market indicated cautious optimism among traders. However, the subsequent acute drop in these rates highlights the withering demand for Ethereum in the derivatives market.
This change raises concerns about the sustainability of the bullish trend, especially in featherlight of Ethereum’s inability to break the resistance at $4,000.
The $3,000 support level has become a key threshold for Ethereum. Shayan stressed that maintaining this level is crucial to stabilizing the market and potentially rekindling bullish momentum.
Failure to stay above $3,000 could create increased selling pressure, leading to a deeper market correction. Analyst wrote:
Overall, Ethereum’s prospects depend on regaining higher funding rates and defending 3k. dollars. These factors will determine whether the market will return to the upward trend or face another correction.
Ethereum market performance
Meanwhile, Ethereum continues to show bearish moves, especially as the broader market has turned bearish recently. Over the past week, Ethereum’s market value has fallen 6.2%, bringing its price below $3,500.
However, there has been a slight boost in the price of ETH over the past day as the asset has seen an boost of 0.9%. This slight boost has seen the price of ETH hovering above $3,200 at the time of writing, down 33.9% from the all-time high of $4,878 recorded in November 2021.
Interestingly, despite the decline in the price of ETH last week, the daily trading volume of this asset showed an opposite trend during the same period. In particular, ETH’s daily trading volume has increased from $20 billion last Friday to its current level of over $26 billion.
Given the current trend in ETH, it is worth noting that this boost in trading volume may be due to the boost in buying pressure and selling pressure ongoing in the Ethereum market.
Featured image created with DALL-E. Chart from TradingView
