Ethereum (ETH) may be nearing the end of its price correction. The second-largest cryptocurrency by market capitalization continues to trade just above $4,000 after a wild selloff that nearly sent it crashing to $3,400 last week.
Ethereum price correction may end
According to a post on CryptoQuant Quicktake by contributor PelinayPA, Ethereum funding rates on the Binance cryptocurrency exchange remain positive, albeit in a narrow range. This shows that long ETH positions are still dominating the market.
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ETH funding rate fluctuate Typically, on Binance, this means that despite the digital asset’s recent extraordinary price rise, futures traders are not exhibiting the greed or euphoria that typically accompanies the intermediate stages of a healthy uptrend.
For example, during the 2021-2022 bull cycle, ETH funding rates often spiked from 0.1% to 0.2%, coinciding with domestic market highs. At present, these funding rates are hovering around 0.01% to 0.03%, suggesting that the market has not yet reached overheating levels.
Furthermore, the absence of negative funding rates confirms the reduction in short positions and increased risk appetite of investors. CryptoQuant analysts added:
The overall trend continues to be upward. Low funding rates and strong price momentum suggest the correction is likely complete. In the short term, small profit-taking or sideways consolidation will be natural between $3,600 and $3,800. If funding rates gradually rise above 0.05%, it could signal overcrowded longs and cause a short-term pullback.
The current combination of moderate levels of leverage and gradually rising spot demand suggests the potential for ETH appreciation towards the $4,500-$5,000 range in the long term. Favorable derivatives structure and financing dynamics could push the price target even higher.
Having said that, the sharp rise in funding rates may be seen as an early warning of further price declines for cryptocurrencies. However, the analyst concluded that ETH’s market structure still supports the possibility of a rise to $6,800 by the end of 2025.
Is ETH ready for new highs?
Several indicators indicate that ETH is about to regain bullish momentum. For example, the recent ETH Spend Return Ratio (SOPR) trend hinted Towards digital assets rising to $5,000 in the near future.
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Furthermore, ETH’s foreign exchange reserves continue to decline rapidly. Recent exchange data show Exchanges’ ETH reserves have hit their lowest levels in years, raising the possibility of an impending “short supply” of the cryptocurrency.
However, there are several other factors at play. fuel ETH fell again and the price fell below $4,000 again. At the time of writing, ETH is trading at $4,053, up 0.2% over the past 24 hours.
Featured image from Unsplash, charts from CryptoQuant and TradingView.com
