Ethereum now appears to have seen a notable shift in its key metric. In particular, a recent CryptoQuant analyst, Burak Kesmeci, reports marked the potential significance of Ethereum’s current funding rates.
The analyst pointed out that similar patterns in the past have been followed by substantial price increases, indicating that Ethereum may be on the cusp of a new wave.
Calm before the storm?
Funding rates are an important future market measure, indicating the balance between long and short positions. When financing rates remain low for an extended period of time, this can indicate indecision or calm in the market, but when rates rise sharply, this often precedes a strong price movement.
According to Kesmeci’s report, Ethereum’s funding rate has fluctuated between 0.002 and 0.005, a relatively low level last seen in September 2023. The funding rate then peaked above 0.015, followed by a price increase from $1,500 to over $4,000.
The analyst further explored whether Ethereum’s funding rate could signal a similar price move in September 2024. The current low financing rates will last for about a month from August.
This situation reflects the period before last year’s significant price increase. September and the last quarter have historically been pivotal times for the crypto markets, with late summer often seeing increased trading volume and price increases.
However, Kesmeci noted:
I can’t say if history will repeat itself, but there is certainly a rhythm to it. We will wait until Ether’s funding rate rises above 0.015 to see if the calm before the storm breaks. A move above this level in funding rates is crucial for tracking healthy gains during bull markets.
How is Ethereum doing so far?
While Ethereum has seen no further decline from last month’s low of $2,197, the asset has not seen a major price increase in recent weeks.
Instead, ETH has continued to consolidate within a specific range. After attempting to create a new all-time high in March that saw the price rise above $4,000, ETH has seen a consistent decline since then and has remained below $3,000 since August.
Year to date, the asset is down 2.7% in recent weeks and is also up 0.7% in the past 24 hours. However, the asset remains below the $3,000 mark and is currently trading at $2,331 at the time of writing.
According to a recent post by a renowned crypto analyst, Alex Clay, on X, ETH may have ended its correction. Clay noted that a “break above $2500 will confirm the start of the rally.”
#ETH/USD
Imo we are at the end of the $ETH correction
Looking for some consolidation above the confluence of Key Zone + 200 MA and 200 EMA
A break above $2500 will confirm the start of the rally
#Ethereum turned out to be a heavy asset, so the $10,000 goal is quite… pic.twitter.com/jjGPPUHWE3
— Alex Clay (@cryptclay) September 9, 2024
Featured image created with DALL-E, Chart from TradingView