Ethereum (ETH), one of the leading altcoins, has experienced a 15% price drop over the past seven days. According to on-chain data, this decline reflects a broader market sell-off. Despite this, sentiment around ETH remains bullish.
Below, we explore two key on-chain metrics indicating potential growth for ETH toward the $4,000 mark in the near term.
Ethereum Shows Bullish Momentum Despite Decline
One key indicator of optimism is the rising Ethereum Estimated Leverage Ratio (ELR), highlighting traders’ continued appetite for risk. According to CryptoQuant, the current ELR stands at 0.53.
This metric measures the average leverage used by traders on cryptocurrency exchanges and is calculated as the ratio of open interest to exchange reserves.
Rising ELR: A higher ELR suggests that investors remain confident in ETH’s future growth and are willing to take on more risk to amplify potential gains.
Another crucial indicator is ETH’s positive funding rate, which currently sits at 0.016. This metric indicates that investors expect ETH’s price to recover. Despite recent price declines, the funding rate across exchanges has remained consistently positive.
Funding Rate: This rate, which is a fee exchanged between long and short traders in the futures market, reflects bullish sentiment when positive. It means long traders are paying short traders, signaling expectations of price increases.
Is $4,000 the Next Stop for ETH?
Currently, ETH is trading at $3,344. If bullish momentum persists and buying activity increases, ETH could break through the resistance level of $3,439.
Next Resistance Level: Once this threshold is breached, ETH could climb to $3,733 and pave the way for breaking the psychological barrier at $4,000.
On the other hand, if the bearish trend continues, ETH’s price could drop to $3,232, invalidating the optimistic outlook.
Summary
Despite its recent price decline, Ethereum shows signs of optimism. A rising leverage ratio and positive funding rates indicate traders’ confidence in future price increases. However, it will be crucial to watch whether ETH can surpass the resistance level at $3,439 or if further declines are ahead.
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