The ether can be headed for an unstable short -term period, as the cost of borrowing in ether packaged has increased and the technical indicators indicate an overestimation, according to a crypto analyst.
“We believe that Ethereum seems vulnerable in the short term,” said the research manager of 10x Markus Thielen on Wednesday.
“The market is entering a quieter summer section – especially in the United States in August – while technical indicators remain deeply exaggerated.”
Weth “less attractive” in the midst of an increase in the funding rate
Thielen explained that a significant risk for the price of the ether (ETH) is the decline in profits of the borrowing of ether wrapped in ether (WETH) – a tokenized version of ETH widely used on decentralized financing platforms (DEFI).
Ether is negotiated at $ 3,623 at the time of publication, up 49% in the last 30 days, according to Nansen. The relative force of the assets against Bitcoin (BTC) jumped 34% over the same period, according to the ETH / BTC ratio of TradingView.
According to the Thielen market report on Wednesday, the use of the AAVE loan platform (Aave) increased from 86% to 95% since July 8, because the loan has exceeded the available offer in the loan basin.
“The variable cost of Weth’s loan has increased and it is not profitable to borrow the ETH now, so there should be more relaxation from those who borrowed ETH on Aave,” said Thielen.
“If that persists, this could trigger a significant course, in particular with financing rates and the positioning that is still stretched,” he added.
Thielen is optimistic about Ether’s long -term prospects
Thielen explained that most of this loan request comes from merchants using the lever effect in implementation strategies to increase yield. However, he added that the current market environment has reduced the profitability of these trades:
“These so-called” closing “strategies are only profitable when the ethn borrower rates are low and the STETH-TO-ETH ankle remains stable.”
Thielen said that more than 90% of ether loans use variable interest rates, leaving borrowers exposed to a sudden increase in loan costs.
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He said that when these variable rates increase as they have recently done, he can “send training effects through Ethereum ecosystem”.
Despite any short -term contrary winds, Thielen awaits a more favorable configuration for Ether after September.
Historically, the third quarter was the second trimester very efficient for ether, with an average of 8.19% since 2013, while the fourth quarter is generally the strongest, with an average yield of 22.59%, according to Coinglass data.
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This article does not contain investment advice or recommendations. Each investment and negotiation movement involves risks and readers should conduct their own research when they make a decision.
