Ethereum (ETH) will claim $3,000 if this happens

Ethereum (ETH), the second largest cryptocurrency, has failed to regain the $3,000 price mark since early August. However, things could look positive again for the asset.

An analyst at blockchain analytics platform CryptoQuant has shared a chart that explains how a continued influx of cash into the Ethereum futures market could lift the largest altcoin.

Source: CryptoQuant Funding Rates to Drive ETH Price Bounce

According to the analyst, the perpetual futures market contributes to the price movement of the underlying digital assets. More buying action in the futures market indicates investor interest in the crypto asset, thus projecting its value at higher prices. Conversely, more selling actions are subsequently accompanied by a decrease in price.

The chart above shows the moving average of Ethereum funding rates, an indicator used to determine whether futures traders are buying or selling. Over the past 30 days, ETH funding rates reveal that futures traders have gradually shifted towards more buying than selling activity, indicating that they are more bullish on the second leading crypto asset.

But there is a catch

While the CryptoQuant analyst expressed optimism that ETH could unlock higher prices, they revealed that there is a catch:

“For Ethereum to continue its recovery and target higher price levels, demand in the perpetual futures market must continue to increase in the coming weeks. A sustained upward trend in funding rates could lead to further gains of medium-term prices”.

This implies that ETH perpetual futures traders need to remain bullish for the leading altcoin to gain momentum. Any major downside in the funding rates metric will stall the price of ETH in the short term.

Meanwhile, ETH continues to trade around $2,600, representing a 16% price decline since early August, when the asset sold for $3,100. The price of the cryptocurrency has remained in this range for nearly two months despite continuous outflows recorded in the local US Ethereum exchange-traded fund (ETF) market.

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