Ethereum has recently entered a critical demand zone after slipping below the $2,300 mark. While there is a risk of further decline in the altcoin’s value, a close examination of Ethereum’s futures market sentiment, particularly funding rates, reveals interesting dynamics that could influence its price trajectory.
According to a recent analysis by CryptoQuant, funding rates have been on an upward trajectory, aligning with Ethereum’s price surge. This alignment indicates a bullish sentiment in the market. However, it’s essential to exercise caution because elevated funding rates can signal an overheated state in the perpetual markets, potentially leading to a significant long-squeeze event.
In a notable development following a recent short-term correction, funding rates have witnessed a significant decline. This decline not only indicates that overall sentiment remains bullish but also suggests a cooling-off in the perpetual markets, which were previously in an overheated state.
This shift in sentiment creates the conditions for a potential resurgence in Ethereum’s price as the market undergoes a corrective phase. Such a trend also implies a reduction in aggressive trading, allowing the market to stabilize before a potential resumption of its upward trajectory.
As a result, there is the possibility that Ethereum’s price could resume its upward movement once the ongoing correction phase concludes.