FFIntroduction
Ethereum (ETH) has faced strong selling pressure recently. Over the past week, its price dropped by 16.48%, hitting a low of $3,095. This sharp decline followed two failed attempts to break the $4,000 resistance level. However, there are signs of hope. Signals from Ethereum’s futures and spot markets suggest the altcoin could recover and climb back to $3,400.
Ethereum Futures Cool Down After $4K Rejection
According to Cryptoquant, Ethereum’s rejection at $4,000 caused large liquidations in the futures market. This led to a sharp price drop. However, the funding rate, which had spiked earlier, has now returned to healthier levels. These lower levels often set the stage for a more sustainable rally. In January 2024, a similar situation happened when Ethereum’s funding rate cooled off. Back then, the price rebounded from $2,166 to $4,096.. This historical pattern suggests that the current market conditions could spark another upward trend.
Positive Signals from Ethereum’s Key Indicators
Despite the recent losses, Ethereum’s on-chain data shows several positive signs:
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Stock-to-Flow Ratio (SFR): ETH’s SFR jumped from 2.19 to 24.67 in the past week. A higher SFR means ETH is becoming more scarce as big investors are holding onto it. This scarcity, combined with rising demand, could push prices higher.
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MVRV Z-Score: The MVRV score fell to 0.745, indicating that ETH is undervalued. When this happens, long-term investors often buy more, which increases buying pressure.
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BitMEX Basis Ratio: The ratio has turned positive, moving from -0.22 to 0.07. This shift shows growing optimism in the futures market, as traders expect prices to rise soon.
In addition, whales have been buying ETH during the dip. When large investors increase their holdings, it creates more demand, which can drive prices up further.
Will Ethereum Rebound?
The futures market is now in a better position, and the rising demand for ETH points to a possible recovery. If these conditions continue, Ethereum could reclaim $3,400 soon. From there, it might test the $3,700 resistance level. However, challenges remain. If bulls fail to maintain momentum, Ethereum could face another drop to $3,160. The market’s balance between bullish optimism and bearish pressure will play a key role in deciding ETH’s next move.
Conclusion
ETH’s recent decline has shaken the market, but the signs of recovery are clear. On-chain data and rising demand suggest a comeback is possible. However, the path forward isn’t without risks. Investors should watch key levels closely and proceed with caution. ETH’s ability to reclaim $3,400 could mark the start of a new bullish phase, but challenges remain in the way.
