Key Points
- Ethereum [ETH] has declined by 16.48% in the past week but shows signs of potential recovery.
- Ethereum’s funding rate cooling and increasing demand suggest a possible price rebound.
Ethereum [ETH], after peaking at $4109, has encountered significant downward pressure. Over the past week, the altcoin has fallen to a low of $3095, marking a 16.48% decline.
Despite this recent dip, Ethereum appears to be poised for a comeback to the $3,300 mark. This prediction is based on Ethereum’s funding rate, which has cooled after facing two rejections at $4k.
Ethereum’s Future Market Cooling
Cryptoquant suggests that Ethereum’s inability to reclaim the $4k resistance resulted in substantial liquidations in the futures markets. This led to a significant market crash, with ETH hitting lows. However, the altcoin’s failure to maintain above $4k brought the funding rate back to healthier levels, suitable for a bullish trend.
This cooling effect could potentially pave the way for a more sustainable rally in the weeks to come. A similar pattern was observed in January 2024, where a drop in funding rates cooled the futures market, strengthening ETH for a significant uptrend.
ETH Charts Indicate Recovery
Despite the downward pressure Ethereum has faced in the past week, the current market conditions suggest a recovery. For instance, Ethereum’s stock-to-flow ratio has increased over the past week from 2.19 to 24.67. This rise indicates that ETH has become more scarce due to increased accumulation by large holders.
Furthermore, the Ethereum MVRV Z score ratio has declined over the past week to 0.745. When the MVRV score reaches such low levels, it indicates that ETH is currently undervalued, making it an attractive option for long-term holders.
The Bitmex basis ratio of Ethereum has also surged over the past few days from -0.22 to 0.07. A positive ratio reflects optimism in the futures market, as traders anticipate prices to rise after the dip.
The futures market appears bullish, expecting ETH prices to recover. Moreover, the spot demand for Ethereum is steadily rising, creating healthy conditions for price gains. If these conditions persist, Ethereum could recover from the $3300 dip and reclaim higher resistance. However, if the bulls fail to retake the market, Ethereum could drop to $3160.
