Ethereum’s Low Funding Rates Signal ‘Full-Fledged’ Rally Ahead: Analyst

Ethereum’s ten-year milestone has been marked not just by reflection but by a steady rally that has investors bracing for what could be the cryptocurrency’s next big breakout.

With ETH trading at $3,800 at press time, still 24% below its all-time high, pseudonymous CryptoQuant analyst CoinCare says its subdued futures funding rates and deep-pocketed accumulation suggest the uptick is far from over.

The Funding Rate Divergence

According to CoinCare, Ethereum’s ongoing four-month rally is quite similar in magnitude to a previous surge that happened between the start of Q4 2023 and the end of Q1 2024. However, unlike that run, where funding rates became overheated, today’s futures funding levels remain near pre-rally lows.

“In the current rally, there has been no overheating in funding rates,” wrote CoinCare. “In fact, the current funding rates are closer to the levels seen before the October 2023 rally began.”

CoinCare believes this is a sign that “a cooldown after a short-term surge is essential,” following which ETH could “enter a full-fledged rally” driven by renewed speculative interest.

Beyond derivatives, fundamental and on-chain forces also support Ethereum’s potential breakout. For instance, heavyweight Ethereum investors recently acquired 220,000 ETH, worth an estimated $850 million, in just 48 hours. This boosted their holdings to 23.5% of the asset’s supply, a record high that should lessen market liquidity and amplify an upward push.

At the same time, spot ETH ETFs have attracted roughly $5 billion in just 17 days, adding steady demand from regulated investment vehicles. Meanwhile, exchange balances have plunged to a near-decade low of 19 million ETH, with more than 1 million coins withdrawn in the past month alone, potentially reducing immediate sell-side pressure.

Price Momentum

Looking at the market, ETH has gained 1.7% in the past 24 hours, 7.9% in the last week, and 57% across 30 days. It is currently trading within a tight $3,708 to $3,874 range, with $4,000 as the next key resistance level and $3,500 providing critical short-term support.

Analyst Ali Martinez believes going above $4,100 could trigger “the real breakout” for ETH, marking a major psychological shift and potentially opening the door for a run towards its 2021 all-time high.

Despite short-term warning signals, such as an overbought RSI and a potential pullback toward $3,300 highlighted in CryptoPotato’s latest analysis, the bigger on-chain picture remains decisively bullish. If CoinCare’s funding-rate thesis proves accurate and institutional demand continues to grow, ETH’s next chapter could be written not with caution but with new highs.