With funding rates decreasing and the $3,000 level approaching, Ethereum faces a significant test.

Ethereum is undoubtedly under pressure as it struggles to post significant gains despite the recent bullish rally in the broader cryptocurrency market.

A recent analysis by ShayanBTC, a contributor to the CryptoQuant QuickTake platform, revealed key factors affecting Ethereum performance.

In a post titled “Ethereum Faces a Crossroads: Funding Rates and $3,000 Support Key to Maintain Bullish Momentum,” Shayan highlights efforts to maintain the asset’s upward trajectory.

Importance of Funding Rates and $3K Support Level

According to Shayan, Ethereum’s bullish momentum has been hampered by fluctuations in funding rates, a key indicator of demand in the derivatives market.

These ratios rose for the first time during the recent cryptocurrency market rally, signaling increased confidence, but then declined after Ethereum was rejected by the $4,000 resistance level, suggesting a decline in trader interest and commitment.

In particular, the surge in funding rates during the rally signaled cautious optimism among traders. However, the subsequent sharp decline in these ratios highlights the dwindling demand for Ethereum in the derivatives market.

This change raises concerns about the sustainability of the bullish trend, especially considering Ethereum’s inability to break the $4,000 resistance.

The $3,000 support level has emerged as a pivotal threshold for Ethereum. Shayan emphasized that maintaining this level is important to stabilize the market and potentially reignite bullish momentum.

Failure to maintain above $3,000 could increase selling pressure and lead to a deeper market correction. The analyst wrote:

Overall, Ethereum’s prospects depend on regaining higher funding rates and defending $3,000. These factors will determine whether the market resumes its upward trend or faces a further correction.

Ethereum Market Performance

Meanwhile, Ethereum has continued to see downward movements, especially recently as the overall market has turned bearish. Over the past week, Ethereum’s market cap has fallen 6.2%, taking its price below $3,500.

However, the price of ETH has risen slightly over the past day, with the asset recording a 0.9% gain. This slight increase pushed the price of ETH above $3,200 at the time of writing, down 33.9% from the all-time high of $4,878 recorded in November 2021.

Interestingly, despite the decline in ETH price over the past week, the asset’s daily trading volume has faced an opposite trend over the same period. Notably, ETH’s daily trading volume has increased from $20 billion last Friday to over $26 billion as of today.

Considering the current trend of ETH, it is worth noting that this increase in trading volume may be due to the continued surge in buying and selling pressure in the Ethereum market.

Featured image created with DALL-E. Charts from TradingView