Ethereum’s impressive rally following Bitcoin’s climb to $123,000 has recently cooled off, and some analysts believe this pause might turn into a short-term setback.
Market expert Markus Thielen from 10X Research has raised concerns that Ethereum could be entering a rocky phase, citing rising borrowing costs and growing signs of network stress.
According to Thielen, the Ethereum lending market is showing signs of overheating, which could lead to increased selling pressure.
One of the key red flags is the usage rate on Aave, a major DeFi lending platform. Since early July, the utilization rate for ETH borrowing on Aave has jumped from 86% to 95%, suggesting that demand to borrow Ethereum is far outpacing supply.
This imbalance has pushed variable interest rates higher, making it less attractive for traders to take on leverage.
Thielen warns that unless borrowing pressure eases, Ethereum could see a noticeable pullback in the near future. Tight funding rates and aggressive positioning could further amplify any downside.
Despite the cautious outlook for the short term, Thielen remains optimistic about Ethereum’s trajectory beyond the summer. He believes conditions could improve after September, setting the stage for renewed momentum in the months ahead.
Alexander Zdravkov
Reporter at Coindoo
Alexander Zdravkov is a person who always looks for the logic behind things. He is fluent in German and has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
Source: https://coindoo.com/why-ethereum-could-face-turbulence-before-its-next-leg-up/