Ethereum trader sentiment needs a bit of a squeeze for ETH to see a ‘parabolic rise’.
Ether trader sentiment needs a modest increase to confirm a significant price increase and an indicator of the token's possible direction in a bull rally.
“We will wait until Ether's funding rate rises above 0.015 to see the calm before the storm,” CryptoQuant's founder Burak Kesmechi said in a September 12 note.
Ether (ETH) funding works like a small market payment, aligning futures with spot prices and settling perpetual contracts.
ETH needs ‘positive signs' for price rally
A higher funding rate indicates strong market optimism and indicates that traders are willing to spend more to hold their long positions.
“To see another parabolic rise in Ether, we need positive signals. In such rallies, the support from the futures market plays an important role,” Kesmechi added.
Ether's current funding rate – about 0.0056% – compared to the level in September 2023, before it increased to more than 0.015, Kesmeci pointed out.
Funding going back to this level is “crucial to maintaining healthy growth during a bull market,” he noted.
The price of Ether has increased by 47.57% in the last twelve months. Source: CoinMarketCap
Following the September 2023 price hike, the price of ETH rose 166% over the next six months to reach 4,006 on March 13, according to CoinMarketCap.
The recent decline in the price of Ether
However, since September 2, Ether has failed to close above $2,500, a critical level for traders.
Critics say the price has lagged behind Bitcoin (BTC), mainly because market participants expect the spot Ether ETF to strengthen its value.
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Futures traders doubt that ETH will reach this level in the near future. If it does, about $576.28 million in short positions will be at risk of liquidation, CoinGlass data shows.
ETH hit an all-time high of $4,810 in September 2021. According to TradingView data, the leverage was roughly 3.78% higher compared to the current 14.20%.
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This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
