Ether trader sentiment needs a slight uptick to confirm an indicator signaling a possible significant price spike and a trajectory for the token that could put it on a bull rally.
“We will wait for Ether’s funding rate to rise above 0.015 to see if the calm before the storm breaks,” CryptoQuant contributor Burak Kesmeci wrote in a Sept. 12 note.
Ether’s (ETH) funding rate acts like a small market fee, aligning futures with spot prices and stabilizing perpetual contracts.
ETH needs ‘positive signals’ for price rally
A higher funding rate signals stronger market optimism and that traders are willing to spend more to hold their long positions.
“To see another parabolic rise in Ether, we need positive signals. The support from the futures market plays a significant role in such rallies,” Kesmeci added.
Ether’s current funding rate — around 0.0056% — is comparable to its level in September 2023, before it rose to above 0.015, Kesmeci noted.
He pointed out that the funding rate moving to this level again “is crucial for tracking healthy increases during bull markets.”
Ether’s price is up 47.57% over the past twelve months. Source: CoinMarketCap
Following a rate increase in September 2023, ETH’s price surged by 166% over the following six months to reach $4,006 on March 13, according to CoinMarketCap.
Ether’s recent price stagnation
However, since Sept. 2, Ether has been unable to close above $2,500, a crucial level for traders.
Critics note its price has lagged behind Bitcoin (BTC), especially since market participants expected the spot Ether ETFs to potentially bolster its price.
Related: 3 reasons why Ethereum price has lagged behind Bitcoin in 2024
Futures traders are doubtful about ETH reaching this level in the near term. If it does, around $576.28 million in short positions will be at risk of liquidation, according to CoinGlass data.
ETH hit its all-time high of $4,810 in September 2021. TradingView data shows its dominance was approximately 3.78% higher at that time compared to its current level of 14.20%.
Magazine: Proposed change could save Ethereum from L2 ‘roadmap to hell’
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.