Ethereum's failure to surpass the $4K mark has caused significant liquidations in the futures market, leading to a rapid decline that has dampened market sentiment.

The chart shows the funding rate index, a reliable indicator of futures market sentiment. Although Ethereum's funding rate surged last week, the rejection at the $4K level led to large liquidations, bringing the funding rate back to the support level of the upward trend.

This cooling effect may pave the way for a more sustainable rally in the coming weeks. A similar pattern emerged in January 2024 when the funding rate dropped sharply, cooling the futures market and setting the stage for Ethereum's next strong rally. This suggests that the current correction may be the beginning of a new growth phase.