Ethereum (ETH) has seen a 15% drop in seven days. However, on-chain data has revealed that this price drop merely reflects the broader crypto market sell-off as the bullish bias towards the altcoin remains significant.
This analysis highlights two key on-chain metrics that suggest a potential rally towards the $4K price zone in the near term.
Ethereum Sees Bullish Momentum Despite Price Drop
First, the increase in Ethereum's Estimated Leverage Ratio (ELR) indicates a sustained appetite for risk, reflecting the likelihood of a price recovery. According to CryptoQuant, the indicator is currently at 0.53.
Ethereum Estimated Leverage Ratio. Fonte: CryptoQuant
An asset’s ELR measures the average amount of leverage its traders use to execute trades on a cryptocurrency exchange. It is calculated by dividing the asset’s open interest by the exchange’s reserve for that coin.
The rise in ELR indicates a higher risk appetite among traders. This suggests that many investors remain optimistic about the future growth of the coin’s price and are willing to leverage their positions to amplify potential gains.
Furthermore, ETH’s positive funding rate is another sign that its price may soon witness a recovery. According to CryptoQuant, it currently stands at 0.016. Despite the recent price drop, the funding rate on cryptocurrency exchanges has remained positive, reflecting a bullish sentiment towards ETH.
Ethereum Funding Rate. Fonte: CryptoQuant
An asset's funding rate is a periodic rate exchanged between long and short traders in its futures market. It ensures that the price of perpetual futures aligns with the spot price. When it is positive, long traders are calling short traders, indicating optimistic sentiment and expectations of price increases.
Price prediction: Is $4,000 the next target?
ETH is currently trading at $3,344. If the bullish bias persists and buying activity increases, its price could rise above the $3,439 resistance. A breakout of this level could take the coin towards $3,733, paving the way for it to surpass the psychological barrier at $4,000.
Ethereum Price Analysis. Source: TradingView
However, if the downtrend continues, the cryptocurrency’s value could drop to $3,232, invalidating this bullish outlook.
The article Traders remain optimistic about Ethereum despite 15% drop appeared first on BeInCrypto Brasil.
