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Ethereum Price Forecast: $3,500 in Focus as Bulls Raise Leverage 300% 

By:
Ibrahim Ajibade
Updated: Feb 27, 2024, 22:01 UTC

Key Points:

  • Ethereum (ETH) price surged above $3,275 within the daily timeframe on Feb 27, its highest level is April 2022.
  • ETH funding rates have recovered from the Feb 26 dip that heralded the slow market opening on Monday. 
  • With ETH funding rate trending at a 50-day peak, it signals an overwhelming conviction of an imminent Ethereum price upswing towards $3,500. 
Ethereum ETH Price Prediction

In this article:

Ethereum (ETH) price soared to $3,290 on Tuesday, Feb 27 as the crypto market rally entered second-gear.

Amid a boom in DeFi demand, increased staking deposits and the upcoming mainnet Dencun upgrade slated for March 13, bullish ETH futures traders have raised their leveraged positions in anticipation of further price upswing. 

Is ETH price on the verge of reclaiming the elusive $3,500 territory? 

Bullish ETH Traders Increase Leverage 300% Amid Dencun Upgrade and Soaring ETF Volumes 

When the Bitcoin ETF opened trading on Feb 26, there were initial fears that another week of weakening demand could derail the crypto market rally. In effect, many LONG position holders had cutbacks on leverage, in a bid to avoid potential losses. However, as the Bitcoin ETF soared to record trading volumes on Tuesday, the bullish signals rapidly filtered through to ETH traders.

Furthermore , Etherum developers also announced March 13 as the scheduled date for the mainent launch of the much anticipated Dencun upgrade, tipped to increase network transaction throughput and cost optimization. As expected Ethereum traders reacted positively to these bullish events. 

Coinglass’ Funding Rates metric, presents a daily aggregate of fees paid between holders of perpetual futures contracts for a specific cryptocurrency.

 

The chart below, shows that ETH funding rate recorded a noticeable dip on Feb 26, falling as low as 0.02%. However, as the markets flipped bullish on Tuesday, the LONG position holders rapidly drove the funding rate to 0.06%, 300% higher than the previous day. 

Ethereum (ETH) Funding Rate vs. Price | Source: Coinglass
Ethereum (ETH) Funding Rate vs. Price | Source: Coinglass

Typically, a surge in Funding Rates suggests that traders are overwhelmingly more confident in the prospect of short-term price upswing, and as a result offer higher fees to keep their LONG contracts open.

Unsurprisingly, ETH price wobbled to a new yearly peak within hours of this surge in funding rate.  

In essence, the chart shows that, after a skittish 24 hours, Ethereum futures traders have regained confidence, and are showing conviction to drive spot prices towards the next milestone, possibly above $3,500.

Ethereum Price Forecast: Coasting Towards $3,500? 

The Ethereum bulls’ rare show of confidence, denoted by the 300% spike in funding rates between Feb 26 and Feb 27, suggests that ETH price will likely advance towards $3,500 in the days ahead. 

IntoTheBlock’s global in/out of money data which categorizes existing ETH holders by their entry prices also affirms this stance.

It shows that, with Ethereum currently trading at $3,250 at press time, about 80% of current holders are in profit. Majority of them may be unwilling to sell, thereby accelerating the rally. 

In this instance, the 1.03 million addresses that acquired 218,650 ETH at the average price of $3,300 could be the next significant resistance to beat. 

However, if that key resistance level crumbles as anticipated by the bullish futures traders, a rally above $3,500 could be on the cards. 

Ethereum (ETH) price forecast, February 2024 | Source: IntoTheBlock
Ethereum (ETH) price forecast, February 2024 | Source: IntoTheBlock

Yet, if prices swing below $3,000, the current extreme leverage positions put ETH traders at risk of major losses if a wave of margin calls triggers a LONG squeeze.

However if they can back up their leveraged positions with covering spot purchases, ETH price will likely hold a relatively high support level around $3,100.

 

About the Author

Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.

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