Ethereum (ETH), which experienced a massive gathering after Bitcoin's $123,000 ATH, has experienced a recent decline.
While the general rise in Ethereum is expected to continue from where it left off, one analyst said ETH may be heading towards a period of short-term volatility.
Markus Thielen, analyst for the 10x research known for its successful forecasting, said Ethereum is at risk of a short-term decline.
Thielen noted that increasing borrowing rates in the ETH network could create a ripple effect across the Ethereum ecosystem.
Analysts said growing interest in Ethereum has led to an increase in borrowing costs and technical indicators pointing to overvaluation.
In this respect, Thielen said that use of the Aave Lending platform has increased from 86% to 95% since July 8th, and increased to 95% as borrowing exceeds the supply of the lending pool.
The variable costs for borrowing Weth are increasing and we are currently not making any profits to borrow ETH, so in order to increase, we need to reduce the number of ETH borrowers via Aave.
However, if this continues, it can cause a meaningful pullback in Ethereum, especially when funding rates and positioning are tough. ”
Tyren added that he presented negative photos of Ethereum in the short term, but that he hopes for a more positive state and an increase in ETH after September.
*This is not investment advice.
