Ether may face instability as borrowing costs for wrapped Ether surge and technical indicators suggest overvaluation. Analyst Markus Thielen warns of vulnerability due to declining profit opportunities for borrowing wETH. Ether is trading at $3,623, up 49% in 30 days, with a 34% surge against Bitcoin. Aave lending platform usage has climbed to 95%.

Thielen notes that borrowing demand comes from traders using leverage in staking strategies. However, the current market environment has reduced profitability for these trades. Over 90% of Ether loans have variable interest rates, exposing borrowers to sudden cost increases. Thielen remains optimistic about Ether’s long-term prospects despite near-term challenges.

Thielen expects a more favorable setup for Ether post-September, historically Q3 is the second-worst-performing quarter while Q4 is typically the strongest for Ether. CoinGlass data shows an average return of 8.19% in Q3 since 2013 and 22.59% in Q4. Thielen anticipates possible headwinds in the short term but remains positive about Ether’s future.

Read more at Cointelegraph: Ether ‘Looking Vulnerable’ In Near Term, But Long-Term Bullish