Ethereum, the second-largest cryptocurrency, has been on a tear recently, with its price rising significantly in the past few days. Could this be the start of a major bull run?
Funding Rates Signal a Potential Surge
Crypto analyst Burak Kesmeci believes that Ethereum’s recent price rally is a strong indicator of a potential surge. He points to the fact that Ethereum’s funding rates have climbed above 0.02, a level that historically has been associated with major price increases.
Funding rates are essentially payments made between traders in perpetual futures contracts. A rate of 0.02 means that long traders (those betting on the price going up) are paying short traders (those betting on the price going down) 2% of their position value. This indicates that long positions are dominating the market, which is often a sign of a bullish trend.
Historical Data Suggests a Bullish Future
Kesmeci points to several historical examples where Ethereum’s price surged after funding rates crossed 0.02. In July 2020, Ethereum’s price increased by over 100% in 50 days after funding rates hit 0.02. Similarly, in November 2020, Ethereum experienced a massive 1000% price surge in 350 days. Most recently, in October 2023, Ethereum’s price rose by 150% in 150 days after funding rates crossed 0.02.
$3,000 Resistance Level: A Key Hurdle
While the current bullish momentum is strong, Ethereum is facing a major resistance level at $3,000. This level has historically been a significant demand zone, meaning that many traders are likely to sell their Ethereum if it reaches this price.
However, the current bullish momentum may be enough to overcome this resistance. If Ethereum breaks through $3,000, it could potentially reach a price target of $4,000. On the other hand, if it fails to break through, it could fall back to $2,400.
What’s Next for Ethereum?
With Ethereum currently trading at $2,970, the next few days will be crucial for determining the future direction of the asset. If funding rates remain high and Ethereum manages to break through the $3,000 resistance level, we could be in for a significant price surge. However, if the market sentiment shifts or the $3,000 resistance proves too strong, the price could fall back.
