Quantum revealed how Ethereum (ETH) saw the death cross with this indicator just before the bearish momentum fully enforced the assets.
Ethereum formed the death cross of funding rates early
In the encrypted Quicktake post, analysts share a chart of Ethereum funding rates. “Funding Rate” refers to a metric that tracks the amount of subscription fees traders in the derivatives market are currently exchanging one another.
If the value of this indicator is positive, it means that the long contract owner is paying a premium to the shorter investors to hold their position. This trend suggests that bullish sentiment is shared by the majority of derivative traders.
On the other hand, the metrics under the zero mark mean that bearish mentality is dominant in the sector as short owners overwhelm the longer ones.
Well, here’s the chart of Ethereum’s funding rates posted by Quant. This shows a simple moving average (SMA) trend for the past few years for indicators over the 50 and 200 days.
Looks like these two lines saw a crossover earlier in the year | Source: CryptoQuant
As shown in the graph above, the 50-day SMA for Ethereum funding rate has been exceeded based on the 200-day SMA in January this year. This suggests that market optimism has witnessed change.
From the graph, we can see that ETH prices have dropped sharply as the crossovers of the two SMAs of indicators appeared. The broader cryptocurrency sector sees a similar pattern, and this trend is not unique to assets as investors are risk aversing.
In the first half of last year, we observed crossovers of the same type of funding rate, followed by a period of weakened action in which Ethereum prices continued.
It wasn’t because of the reverse crossover that the 50-day SMA found a break beyond the 200-day SMA. The same pattern was also seen in 2023.
A bullish crossover in funding rates could have to be again done for constructive price actions to return to Ethereum and other assets. “When speculators return and start using greedy leverage, the crypto bull market begins,” analysts point out.
But when this happens, everyone guesses as the 50 and 200-day SMAs of indicators are currently quite apart. In 2024, the line took months to cross, so it could take some time for the crossover to occur now.
ETH Price
Ethereum is moving to end with a red sound in March as the price has dropped to a $1,800 level after seeing a near 14% drop in the past week.
The trend in the ETH price over the last five days | Source: ETHUSDT on TradingView
Dall-E, featured images from cryptoquant.com, charts from tradingview.com
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