Ethereum Surges 10% to $2,500 on Bullish Sentiment and Funding Rate Shift

Ethereum's price has surged above $2,500, marking a significant milestone for the second-largest cryptocurrency by market capitalization. This upward movement has been driven by a combination of factors, including strong bullish sentiment and a shift in funding rates on major exchanges. However, analysts are cautioning that this rapid ascent could be followed by a short-term correction.

The recent price action in Ethereum has been characterized by a powerful spike, with the cryptocurrency decisively breaking above and re-testing the crucial $2,500 mark. This movement reflects a notable price action driven by a confluence of factors that signal strong bullish sentiment. However, caution against potential short-term volatility has also appeared as it began consolidating in the $2,400–$2,500 range.

Analysts have noted that while the current price action is bullish, there are signs of potential overheating in the market. A recent study from a CryptoQuant analyst reported a shift in funding rates on Binance, moving from negative to positive territory. This indicates that leveraged long positions are aggressively betting on a continued ETH price rise. However, this also raises concerns about the market turning into “overheating,” where further increases could precede with a short-term correction.

On-chain data presents a cautionary note, despite the recent strong price action. The data reveals that Binance witnessed an inflow of 177,000 ETH over three consecutive days. This movement of ETH onto exchanges has higher odds that some large holders may be preparing to take profits or reallocate their assets, potentially leading to selling pressure.

Even popular analyst Degen Hardy noted with caution that he will stay long on ETH as long as it remains above the $2,400 mark. As he believes in the short term, if $2400 is taken out, it will mean that bulls are struggling to reclaim untapped weekly highs. This increases the likelihood of a dip coming, as the market might aim to normalize the current overheated funding dynamics.

While a retracement might be on the horizon in the short term, the underlying long-term bullish structure of Ethereum's price appears intact. If the lower border of the consolidation zone is breached, then a short-term fall will pull ETH price to June 22nd low at $2,120. However, if the upper border is pierced, then the minimum aim is set at $2,620.