The leading altcoin, Ethereum, sees continued hype because of its September Merge upgrade. Despite that, market players have had challenges trusting $ETH with their savings following continued funding rates plunge. Meanwhile, can we expect price surges while fear plague the network?
Thrilling Sightings
Ethereum has witnessed plunged beneath a descending resistance level since hitting its ATHs at $4,868 in Nov 2021. Even during this publication, Ethereum endured a new 2% dip, swaying around the $1,600 level.
The ETH disbelief remains strong in a particularly volatile trading week. Market participants have shorted at the highest ratio since June 2021. Meanwhile, the funding rate noted significant drops on August 28 and 29. While publishing this blog, the rate consolidates around similar levels. Moreover, Santiment revealed that the coin’s funding rate plummeted to the most extreme level.
A negative number indicated that short investors paid long traders a premium to keep their positions. Nevertheless, investors should not surrender as such cases have previously triggered price hikes.
Historically, price upticks emerged amid such situations. That was the narrative during this publication. That way, a U-turn might appear in the funding rate, which hovered beyond the $0 level.
Is revival possible because of a possible short-squeeze? Yes. Such negative funding rates appeared last in July 2021, when the case appeared before a massive Ethereum short-squeeze. A short squeeze emerges when an asset sees a sharp price surge because many short sellers quit their positions.
Similarly, Ethereum might witness a price uptick as the market stays overleverage & liquidate massive shorts. These liquidations propel prices even higher, translating to more shorts forced out of the market.
Expectations Vs. Reality
Meanwhile, not everyone supports the narrative of a massive Ethereum bounce beyond the crucial resistance of $1.6K. For instance, the renowned market expert Lark Davis cautioned that Ethereum confirms potential near-term downsides.
Moreover, the August 30 Bloomberg report suggested possible ETH plummets to $1000, exploring two-month lows amid volatile price fluctuations as the 2nd-largest crypto awaits the Merge. Indeed, a bearish rale as the highly anticipated Merge nears.
Nevertheless, that doesn’t imply ETH’s demand vanishing overnight. For example, CryptoCompare’s report indicates a 2.36% increase in ETH investment products to $6.81 billion in AUM (asset under management) in August, outshining BTC products’ 7.16% dip to $17.4B. Furthermore, the options market shows growing open interest, highlighting high Ethereum interest by market players.
