Ethereum eyes $4K again after breaking $3,500 resistance

Ethereum’s (CRYPTO:ETH) price is showing positive signs of bullish continuation after recently reclaiming crucial support levels, but challenges remain before reaching the $4,000 mark.

On the daily chart, Ethereum has bounced back from the $3,200 support level, breaking through the $3,500 resistance.

If the price can maintain above this level, a potential rally toward $4,000 is expected in the short term.

The RSI, which is above 50%, suggests bullish momentum, reinforcing this outlook.

However, the 4-hour chart presents some cautionary signals.

Although the price has surged past $3,500, a bearish divergence between the recent price highs and the RSI raises concerns.

This divergence suggests a possible pullback to retest the $3,500 support level before any further upward movement.

On-chain data also provides valuable insights into Ethereum’s market sentiment.

Despite the asset holding above $3,000 for several months, a high level of optimism from investors initially led to a correction, halting the upward trend.

The Ethereum funding rates metric, which tracks the activity of buyers and sellers in the futures market, showed excessive optimism when prices approached $4,000.

This resulted in a liquidation cascade and a correction phase.

Recently, funding rates have decreased, indicating a cooling of futures market sentiment.

This shift could pave the way for a more sustainable rally if sufficient demand materialises in the spot market.

At the time of reporting, the Ethereum (ETH) price was $3,683.35.