Ethereum's Low Funding Rates Suggest a Potential 'Fully-Fledged' Rally According to an Analyst
Ethereum's current rally, reminiscent of a previous surge that took place between Q4 2023 and Q1 2024, shows signs of a significant breakout in the near to medium term.
The similarities between the two rallies are striking. Both periods featured low or subdued futures funding rates coupled with strong institutional demand, a combination that historically precedes significant upward price moves. This low funding rate divergence, where the costs to hold long futures positions remain weak despite price appreciation, suggests that speculative leverage has not overheated.
The current technical setup also supports the possibility of a major breakout. An ascending triangle breakout imminent, a strong monthly candle, and a bullish MACD crossover occurring over a multi-year timeframe, all point towards a potential price surge. Breaking above $4,200 could trigger a price surge comparable to previous major climbs, with some analysts projecting targets as high as $16,700 by 2026 under the primary bull case, or even up to $30,000 in aggressive scenarios based on adoption trends and performance metrics.
Institutional demand, ETF inflows, increased staking reducing liquid supply, and growing adoption in decentralized finance and layer-2 solutions bolster Ethereum’s fundamental outlook, underpinning the technical factors suggesting a strong breakout potential.
Recent on-chain developments further support a bullish outlook for Ethereum. Exchange balances have plunged to a near-decade low of 19 million ETH, indicating a reduction in sell-side pressure. Furthermore, heavyweight Ethereum investors recently acquired 220,000 ETH, worth an estimated $850 million, in just 48 hours. This acquisition boosted their holdings to 23.5% of Ethereum's total supply, a record high.
Currently, ETH is trading within a tight $3,708 to $3,874 range. $4,000 is the next key resistance level for ETH, and $3,500 provides critical short-term support. The increased holdings by heavyweight investors could lessen Ethereum's market liquidity and amplify an upward push. Going above $4,100 could trigger "the real breakout" for ETH, potentially opening the door for a run towards its 2021 all-time high.
Spot ETH ETFs have attracted approximately $5 billion in 17 days, adding steady demand from regulated investment vehicles. CoinCare, a pseudonymous cryptocurrency analyst, believes this indicates a potential cooldown after a short-term surge, followed by a full-fledged rally.
In summary, the similarity in funding rates and institutional interest between these two periods is an indicator supporting Ethereum's potential for a major breakout and continued strong rally in the near to medium term.
- The striking similarities between the two rallies of Ethereum, including low futures funding rates and strong institutional demand, suggest a potential for significant investment in cryptocurrency trading, particularly in Ethereum.
- The imminent ascending triangle breakout, strong monthly candle, and bullish MACD crossover in Ethereum are signs that point towards a potential price surge in the blockchain technology-based finance, amplifying opportunities for investors.
- The Fundamental outlook of Ethereum is further bolstered by increased institutional demand, ETF inflows, staking reducing liquid supply, and growing adoption in decentralized finance and layer-2 solutions, making it an attractive proposition for long-term investors and traders.
