To say the least, the Ethereum “merger” that happened last week is a perfect illustration of the famous stock market saying “sell the news after buying the rumor”.
This expression in fact designates that investors often buy cryptocurrencies (or other assets) in anticipation of a positive event, so that as soon as the event occurs, it has already been fully accounted for. . And at worst, investors take their profits, causing a correction, as was the case with Ethereum.
Glassnode predicted the fall of Ethereum
However, it is interesting to note that this market reaction to the Ethereum merger was anticipated by the blockchain data analysis firm Glassnode, which as early as last month predicted the fall of Ethereum after the Merger, based on to analyze the future. and options markets.
“It’s not surprising that profits were taken where they were available,” Glassnode wrote about it in a report yesterday, which did not stop him from calling the Ethereum network update “one of the most significant engineering achievements in the blockchain industry.” .
Ethereum futures market funding rate sends a positive signal
Prior to the merger, Glassnode noted that Ethereum funding rates were falling to an all-time low of -1200% annually among traders looking to hold short positions.
However, “funding rates have since fully returned to a neutral level, suggesting that much of the short-term speculative premium has dissipated,” Glassnode explained. In other words, the data that allowed the firm to predict the fall of ETH now suggests that Ethereum’s correction may be over.
Note that for Ethereum perpetual futures, funding rates correspond to regular payments made to buyers or sellers, depending on the difference between the price of futures contracts held and the price of Ethereum. Therefore, when the market is bullish, the financing rate is positive, and increases steadily. In this case, the long traders will pay the fees.
Conversely, the funding rate is negative when the market is bearish, in which case the short traders pay the fees to the long traders. It should be noted that this mechanism aims to converge spot prices and futures prices.
What does technical analysis say for ETH/USD?
In addition to these elements that could be positive for the price of Ethereum this week, it is also important to take into account the graphic context in order to correctly anticipate market developments.
Unfortunately, technical analysis has been sending mixed signals so far. The H4 chart below indeed shows that the Ethereum is still locked in the downward channel that frames its evolution since the beginning of the post-Merge fall.
Furthermore, a departure from above this channel would put Ethereum against significant resistance at $1400/1415.
On the positive side, it should be noted that the fall of Ethereum currently seems to have stopped at the threshold of $ 1280, which was repeatedly a central role of resistance in June-July 2022, and on it seems. they can now be counted as support. So it may be an ideal stop loss in the context of a long position. But it also means that a break below this threshold would be an important bearish signal for Ethereum.
Do you think Ethereum has completed its post-Merge correction and is about to take off again? Learn about the different ways to buy Ethereum!
