Ethereum [ETH] It saw a significant drop below the $1600 level against the US Dollar. ETH has even fallen below $1,500 at the time of writing on CoinMarketCap. Now, any refund of over $1.5,000 could face hurdles, but again, overshooting is still a possibility.
Rise in the middle of a storm
The largest cryptocurrency, at the time of writing, is trading at around $1.45K after suffering another 3% correction. Here, ETH failed to gain momentum above the resistance levels at $1,660 and $1,675, however, there is still a potential upside move due to the short-term pressure in the market.
Interestingly, Ethereum funding prices have fallen to their lowest level in 14 months, which could pave the way for a short squeeze in the market. A CryptoQuant post by a crypto analyst sheds light on the near-bullish narrative.
Source: CryptoQuant
As seen above, ETH funding rates are at their lowest since July 2021, and are the lowest in 14 months. A negative value means that short traders pay a premium to long traders to maintain their positions.
Well, the “funding rate” is an indicator that measures the periodic fees that traders in the Ethereum futures market charge to each other.
Notably, this fall (albeit with a bearish tone) could help with a potential bullish trend for ETH. The blog post added that the last time funding rates were negative, “was on July 21 just before massive short pressures on Bitcoin & Ethereum.”
A short squeeze occurs when the price of an asset rises sharply because many short sellers are forced to leave their positions.
Similarly, ETH could see a price swing to the upside while the market is still crowded and liquidating a large number of short positions. These liquidations push the price higher, which leads to more short selling.
When short sellers close their positions, a cascading effect of buy orders occurs. As such, a short compression is usually accompanied by a similar rise in Trading volume. This was exactly what can be seen in the ETH trading volume on Santiment.
In just 24 hours, ETH has seen an increase in trading volume (interested buyers jumped) by more than 26 billion.
Source: feeling
Moreover, the constant passion of the dominant buyers, or even whales, played a major role in this.
One thing leads to another
Needless to say, this continued interest has really led to an unprecedented attraction/demand for the token.
Especially now before we talk so much about merging. According to OKLink, the amount of ETH burned in Ethereum has exceeded 2.6 million, which is about $3.76 billion at the current price.
Interestingly, since the implementation of EIP-1559, Ethereum’s annual inflation rate has fallen by 50.77%.