Ethereum (ETH) has seen a slight recovery after dipping below $2,200 earlier in the month, now trading above $2,300. Crypto analyst Burak Kesmeci suggests that a significant price spike could occur if Ethereum’s funding rate rises above 0.015%. Currently, the rate is lower, prompting traders to monitor market signals closely. If this threshold is reached, it could lead to a strong upward surge in Ethereum’s price.
The funding rate is crucial in aligning Ethereum’s futures contracts with its spot prices, helping stabilize perpetual contracts. Ethereum’s current funding rate stands at around 0.0056%, which Kesmeci identifies as an important indicator for future price movements.
Historically, when this rate rises above 0.015%, it signals increased market optimism and often correlates with a rise in Ether’s price. Kesmeci also points out that support from the futures market is vital for any major rallies in Ethereum’s price.
Ethereum Eyes Potential Rally as Funding Rate Nears Key Threshold, Analyst Predicts Price Surge
Historical data supports the potential for a price rally if the funding rate increases. For instance, in September 2023, a similar rise in the funding rate led to a 166% increase in Ethereum’s price over six months, reaching $4,006 by March 2024.
Despite the positive indicators, Ethereum has struggled recently to close above the crucial $2,500 resistance mark, which many traders consider a key level. A breakthrough above this level could lead to significant gains and pressure on short positions.
Ethereum’s recent performance has frustrated some market participants, especially compared to Bitcoin’s success. Bitcoin has seen stronger price action, partially driven by Bitcoin ETFs, which have had a greater impact on the market than Ethereum ETFs. If Ethereum manages to break the $2,500 resistance, data suggests that around $576 million in short positions could face liquidation, further fueling price gains.
In 2024, Ethereum has underperformed compared to Bitcoin, with Bitcoin surging by 36% while Ethereum has only gained 0.02%. This underperformance is tied to the success of Bitcoin ETFs, which have driven about 8% of the spot volume compared to just 1% for Ether.
Despite this, analysts remain optimistic about Ethereum’s potential for recovery. A rise in the funding rate above 0.015% could set the stage for a parabolic price rally, according to Kesmeci, signaling that Ethereum’s future looks promising if the right market conditions are met.
