Panic and Greed Are Shaping Ethereum’s Price: What’s Next?

Ethereum is experiencing volatile price movements driven by extremes of greed and panic which are manifesting in funding rates according to analysts. A cycle marked by leverage rather than genuine spot demand is at play, necessitating a reset in derivatives positioning alongside increased spot buying to break this cycle. Analysts from Santiment noted that Ethereum's price fluctuations coincide with extreme funding rates, creating patterns of local tops and bottoms. Recent data showed Ethereum’s funding rates slipping into negative territory, indicative of a local bottom amid significant liquidations. This feedback loop has amplified volatility, complicating market direction interpretations. Lead Analyst Illia Otychenko noted the derivatives market’s strain, suggesting that the market's sustainability relies more on leverage than on actual buying demand. Investors are attempting to buy on dips, leaving the market vulnerable to sharp declines if momentum fails. In the short term, Ethereum's trading may remain range-bound and bearish unless there is a notable shift in funding dynamics. In a broader view, analysts maintain bullish sentiments amid favorable macroeconomic conditions as crypto markets brace for upcoming changes, including Fed policy adjustments.

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