During the past fortnight, Ethereum [ETH] has encountered challenges in sustaining an upward trend. The cryptocurrency has been moving within a price range of $3500 to $3300 during this period.
Given the current market conditions, stakeholders are curious about potential catalysts that could propel ETH towards recovery.
In this context, CryptoQuant analyst Burak Kesmeci has highlighted four key metrics from the Futures market and their implications for Ethereum’s trajectory.
Insights from Futures Market Analysis
Kesmeci’s evaluation focused on four critical Futures market indicators: Funding Rate, Taker Buy-Sell Ratio, Open Interest, and liquidation.
The Funding Rate for Ethereum stood at 0.01, indicating a healthy market where long positions could uphold ETH’s spot market.
Moreover, the Taker Buy-Sell ratio for Ethereum was 0.57, showcasing a prevailing buying sentiment in the derivatives market.
Increased buying activity exerts upward pressure on prices, which is essential for driving demand and boosting prices.
Furthermore, Ethereum’s Open Interest experienced a 3.18% surge within 24 hours, suggesting a temporary escalation in derivatives trading.
Lastly, the data on Ethereum’s liquidation indicated a significant closure of short positions, amounting to $6 million up to the latest data point.
This reduction in selling pressure within derivatives markets counteracted the impact of the rising Open Interest.
Consequently, the selling pressure in ETH Futures markets notably eased. While the surge in Open Interest suggests market activity, the bulls have entered the market and exhibited increased activity.
Can Futures Propel ETH Recovery?
Despite the optimistic outlook presented by Ethereum’s derivatives market performance, it is crucial to cross-examine the dynamics in the spot market.
Although the Exchange supply ratio is not exclusively tied to spot markets, the supply on exchanges correlates with spot market behavior.
At present, ETH’s exchange supply ratio has declined to 0.14 over the last week. This decrease implies that investors are holding onto their assets away from exchanges.
This trend indicates accumulation and anticipatory behavior for potential price improvements.
Positive sentiment has also prevailed among significant holders in the recent period, with the large holder’s netflow consistently positive over the week.
This reflects a significant capital inflow from whales.
Furthermore, amid accumulation, Ethereum’s long-term holders have shown a bullish sentiment, displaying confidence in the altcoin’s future outlook as their profits exceed those of short-term holders.
In summary, bulls have become more active in both derivatives and spot market operations. Increased investor confidence across these sectors could pave the way for a substantial price recovery for Ethereum.
With growing optimism in the market, Ethereum stands to achieve further gains on its price charts. Sustaining these conditions may enable Ethereum to break out of its consolidation range and reclaim the $3700 levels.
However, if bearish sentiments outweigh bullish trends, leading to a market crash, Ethereum could potentially drop to $3200.