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Stabilizing Ethereum Funding Rates Suggests Recovery Might Be In The Works

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Stabilizing Ethereum Funding Rates Suggests Recovery Might Be In The Works

Ethereum funding rates had taken a beating after the Merge was completed. This event was the single most anticipated upgrade in the history of the network, and it had affected both price and funding rates in adverse ways. However, as the market begins to settle into the new normal of Ethereum being a proof of stake network, things are beginning to stabilize. One of those is funding rates returning to pre-Merge levels.

Funding Rates Stabilizing

The days leading up to the Ethereum Merge had been extremely volatile for the crypto market. Ethereum itself had borne the brunt of this, and even though the days leading up to the upgrade were filled with positive movement, it had quickly changed.

Ethereum funding rates nosedived on the back of the Merge. It fell from trending just below neutral levels at around negative 0.02% to negative 0.35% by the time the upgrade was final. It also follows the sell-offs that rocked the market at the same time. In the days leading up to the Merge, FTX longs had seen a total of 9.92% paid by shorts to hedge their positions on the exchange.

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ETH funding rates recover | Source: Arcane Research

However, not long after the Merge was finalized, the market began to see recovery. This recovery was just as sharp as the decline, returning from negative 0.35% to around negative 0.02% by September 16th. This sharp uptrend was shown in the price of the digital asset, which maintained most of its value through this time. This shows that despite the sell-offs, there are still a significant number of Ethereum holders who maintain long exposure to the digital asset.

Ethereum Might Recover

With funding rates recovering back to pre-Merge levels, it shows that there is still bullish sentiment among investors. This sustained bullish sentiment continues to prop up the price of the digital asset even through the bear market. 

Since most of the sell-offs happened due to the hype around the Merge, it is only normal that Ethereum has begun to stabilize once most of that hype has now worn off. It leaves the accumulators at a point where they are able to purchase the digital asset without sacrificing too much of their previous value.

ETH price drops below $1,300 | Source: ETHUSD on TradingView.com

Even now, with the FOMC-inspired volatility in the market, support for ETH continues to ramp up. Exchange outflows over the last 24 hours show this growing accumulation trend. Outflows were about 40% higher than inflows for ETH for the day, according to data from Glassnode.

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If ETH is able to maintain its support level at $1,250, this point will serve as a bounce-off point for the digital asset. If ETH successfully breaks through the $1,300 resistance, a retest of the $1,500 level is possible in the next week. 

Featured image from Currency.com, charts from Arcane Research and TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

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Fidelity Launches Ethereum Index Fund — Sees Client ‘Demand For Exposure To Digital Assets Beyond BTC’

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Fidelity Launches Ethereum Index Fund — Sees Client ‘Demand For Exposure To Digital Assets Beyond BTC’

A filing with the U.S. Securities and Exchange Commission has shown that Fidelity looks to launch an investment product known as the Fidelity Ethereum Index Fund on October 4, 2022. While the new fund is not an exchange-traded fund it is said to be structured as a “traditional limited partnership.”

Traditional Limited Partnership

According to a filing lodged with the U.S. Securities and Exchange Commission (SEC), Fidelity planned to launch an Ethereum index on October 4, 2022. As per the filing, a minimum investment accepted from an outsider interested in the security is $50,000. At the time of writing, the fund had just over $5 million worth of assets.

As explained by a report published by Barron’s Advisor, the new security, which is also known as the Fidelity Ethereum Index Fund, is not an exchange-traded fund (ETF). Instead, the ethereum index fund is said to be structured as a “traditional limited partnership.”

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A limited partnership according to Investopedia, is a partnership made up of two or more partners. One partner known as the general partner is responsible for managing the business while other partners who are also known as limited partners are not involved in the day-to-day activities of the business.

Clients’ Demand for Exposure Beyond Bitcoin

Commenting on the revelations that Fidelity had launched an ETH-based index fund less than two years after it launched a similar fund for bitcoin, a spokesperson for the investment company reportedly said:

We have continued to see client demand for exposure to digital assets beyond bitcoin.

The new fund, whose benchmark is the Fidelity Ethereum Index PR (FIDETHP), is reportedly constructed using the second largest crypto asset’s price feeds which are obtained from the so-called approved exchanges.

What are your thoughts about this story? Let us know what you think in the comments section below.

Terence Zimwara

Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: ThomasAFink / Shutterstock.com

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Number of active Ethereum users increased 36% in Q3 despite bear market

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Number of active Ethereum users increased 36% in Q3 despite bear market

Number of active Ethereum users increased 36% in Q3 despite bear market Andjela Radmilac · 9 hours ago · 2 min read

Data from Dune Analytics showed that Ethereum gained over 4.5 million new active users in the third quarter.

2 min read

Updated: October 6, 2022 at 3:24 pm

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Cover art/illustration via CryptoSlate

Ethereum saw a significant increase in the number of unique users on its network in the third quarter.

Data from Dune Analytics showed that Ethereum gained over 4.5 million new active users in the third quarter. The growth breaks the trend of steady decline in users the network has been facing since the fourth quarter of 2021 when ETH’s price rose to its all-time high of $4,890.

The 4.5 million new users represent a 36% increase in its active user base, showing that the ongoing bear market did little to curb interest in Ethereum.

Number of unique active users on Ethereum per quarter (Source: BestBrokers)

Alan Goldberg, an analyst at BestBrokers, said that the long-anticipated Merge certainly brought more interest to the Ethereum network but isn’t the only factor that caused such a significant rise. Goldberg notes that the Merge was completed so late in the third quarter that ly wasn’t the only reason the network saw the uptrend in active users:

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“Other factors have to be taken into account, including the fact that people actually find cryptocurrencies as an investment option and the record lows of the third quarter of 2022 seemed like a bargain to individual investors.”

At the end of the second quarter, Ethereum’s price dropped below the $900 mark — causing a market frenzy. However, Goldberg believes that the low price must have looked like a bargain discount to many optimistic investors who jumped at the opportunity to enter the market. A cheap ETH could have also opened the door for retail investors priced out of the network due to high gas fees.

Since then, ETH’s price rebounded after breaking the $1,000 resistance and saw an increase of over 100%, nearly reaching $2,000 in August. ETH’s price — currently at around $1,300 — still represents a solid opportunity for investors.

Researchers at BestBrokers noted that price volatility and high volume are the two main factors driving interest in the crypto market. This is exactly what Ethereum delivered in the past quarter, attracting millions of new investors and showing the potential to attract even more. Goldberg added:

“The 36% increase in the active users within just 3 months may be interpreted as a sign that the crypto markets are getting back on the positive trend. The fact that the number of active users is over 14% higher than in the fourth quarter of 2021 when both Bitcoin and Ether prices were at an all-time high, only reinforces crypto analysts’ expectations that the markets have a great potential to rise again.”

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Ethereum [ETH]: This is the silver lining to its post-Merge performance

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Ethereum [ETH]: This is the silver lining to its post-Merge performance

It’s been more than 2 weeks since Ethereum’s Merge happened. However, the hype that existed before the event died down soon, with the event followed by disinterest in the cryptocurrency. Glassnode recently confirmed this outcome after observing a sustained drop in ETH Open Interest in perpetual Futures contracts.


Here’s AMBCrypto’s Price Prediction for Ethereum [ETH] for 2023-24


The amount of ETH Open Interest in perpetual Futures contracts recently dropped to its lowest level in 4 weeks. This seemed to be a sign of dwindling demand from the derivatives market, one which usually reflects outcomes in the spot market.

📉 #Ethereum $ETH Open Interest in Perpetual Futures Contracts just reached a 1-month low of $239,630,633 on #Deribit

View metric:https://t.co/5MhXAkWLAZ pic.twitter.com/S1gS88PYqj

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— glassnode alerts (@glassnodealerts) October 5, 2022

ETH’s on-chain metrics highlighted similar observations in the spot market.

For example, the amount out of exchanges has slowed down significantly over the last few weeks, with the same now at a 6-month low. Exchange withdrawing addresses have particularly tanked since the end of September.

Source: CryptoQuant

The observed drop in exchange withdrawing addresses would traditionally be the case during a sell-off. It indicates low demand and would be accompanied by an increase in exchange depositing addresses during bearish market conditions. However, exchange depositing addresses seemed to suggest low activity.

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The aforementioned observation confirms that sell pressure is also low and this explains ETH’s price action. The latter has been sideways for the last few days, as we shall observe later. In the meantime, the observation also means investors, especially whales, are sitting on the sidelines.

Source: Glassnode

ETH addresses holding more than 100 ETH (whales) have been offloading their holdings since mid-September. Their outflows have tapered out in the last few days, explaining the recently observed decline in volumes and price movements.

Jumpstarting ETH’s demand

The tapering outflows from whale addresses may suggest that ETH is about to usher in the bulls. Also, active addresses dropped to their lowest level on 3 October, but have increased slightly since.

Source: Glassnode

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This pivot in the number of active addresses might be a healthy indication that ETH demand is about to recover.

Conclusion

ETH has struggled to reclaim the $1400-price level since the last week of September. This, after coming off the sell pressure that has persisted since the Merge. This performance likely reflects a cautious outlook as investors sit on the sidelines to assess the post-Merge performance. Perhaps, due to the expectations of a deeper sell-off in case the Ethereum network experiences some challenges in its new state.

The Ethereum network has not reported any issues so far and the post-Merge sell pressure has flattened out. Perhaps these conditions may aid the return of investor confidence.

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Michael is a full-time journalist at AMBCrypto. He has 5 years of experience in finance and forex and more than two years as a writer in the crypto and blockchain segments. Michael’s writing at AMBCrypto is primarily focused on cryptocurrency market news and technical analysis. His interests include motorcycles and exotic cars.

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