Ethereum remains relatively steady as prices hover above $2,500, but a weak bullish sentiment persists. The daily chart shows the cryptocurrency still trapped within the bear bar of August 27, indicating a bearish formation. For Ethereum bulls to take control in the short term, a high-volume close above $3,500 would be necessary to signal a rapid trend shift favorable for holders.
One analyst, drawing on data from CryptoQuant, suggests a bearish outlook for Ethereum in the short to medium term. Over recent months, the funding rate in Ethereum perpetuals on exchanges like Binance and OKX has been positive but declining. These perpetual platforms allow traders to use leverage, meaning they borrow from the exchange. With higher leverage, traders face increased risk of liquidation.
The funding rate in these markets can vary based on price action. A positive funding rate indicates bullish sentiment, with traders expecting prices to rise, necessitating long-position holders to pay those who are selling. Conversely, a negative funding rate signals bearish sentiment, suggesting further market decline, where short sellers must pay those posting buys.
Despite Ethereum’s price reaching $3,900 in May, the funding rate has continually decreased, though it remains positive. This indicates that while prices have fluctuated, the dominant sentiment is bearish. To reverse this trend, a significant spike in buying interest would be required, potentially lifting both prices and the funding rate.
A factor that may drive prices up is the inflow of funds into spot Ethereum ETFs in the United States. Data from Soso Value reveals that spot Ethereum ETF issuers in the country saw net inflows of over $5.8 million. However, this is considerably lower than figures recorded at the end of July.
As the market watches for signs of a bullish trend reversal, the interplay of funding rates and ETF inflows will be crucial indicators to monitor.
