The rise in Ethereum (ETH) prices has drawn investors' attention to the world's second most capitalized cryptocurrency and sparked a flurry of buying activity in the digital asset market.
The price of Ethereum continues to climb towards $3,900 and is targeting the psychological $4,000 mark. At the time of writing, ETH is trading at $3,777, and its market capitalization exceeds $450 billion.
Along with the rise in the price of the second most popular cryptocurrency, Ethereum, funding rates have also increased, which is a key indicator of trading intensity in the futures market.
Positive rates indicate a bullish outlook, while negative rates indicate bearish sentiment among traders.
Now, Ethereum funding rates have increased significantly, mimicking the dynamics observed in late 2020, when ETH began to climb to an all-time high.
It is worth noting that excessively high funding rates can indicate a rapid correction of the asset. According to CryptoQuant, during ETH's bullish momentum, traders should monitor funding rates and employ effective risk management strategies.
"Higher rates increase the risk of prolonged liquidation cascades, which can lead to increased market volatility and unexpected corrective moves," CryptoQuant said in a statement.
At the same time, the Dencun upgrade scheduled for March 13th is expected to support ETH's current bullish trend.
Dencun is a major upgrade to the Ethereum network required for the further implementation of Danksharding. It is the biggest upgrade since Shapella, which was rolled out in April 2023.
Most analysts believe the bulls are targeting $5,000 in the medium term, which would surpass ETH's all-time high.
With its robust blockchain technology and versatile applications, Ethereum has become one of the protagonists in the crypto space, attracting new investors and developers.
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