Ethereum Facing A Possible Shock Due To A Domino Effect From WETH

The party around Ethereum seems to be over. The altcoin was on its way, ready to cross the symbolic $4,000 threshold. But despite this surge, ETH stalled around $3,600, raising doubts. Rising borrowing rates, liquidity pool saturation, flashing technical signals: all the ingredients for a high-risk summer are gathered. In the crypto world, even giants like Ethereum are never safe from a domino effect.

High-Rate Regime: The Crucible of Ethereum’s Fragility

The latest on Ethereum: the cost of borrowing in wETH has risen dramatically since early July on the Aave platform: the utilization rate went from 86% to 95%. This near saturation makes borrowing unprofitable for many. Markus Thielen states:

The variable borrowing cost has gone up and it has become unprofitable to borrow ETH. 

When more than 90% of loans are variable rate, a sudden rise can trigger a rapid unwind. This could result in forced liquidations, liquidity withdrawals, and large-scale repositioning. Added to this is a stressed stETH-ETH peg, where slippage could amplify DeFi stress.

Historically, Ethereum has already entered a marked technical overbought zone. Despite the calm summer season in the US (volume down, potentially amplified volatility), the indicators remain tense.

Finally, Q3 is often the weakest quarter for ETH, with an average of +8.19%, versus +22.59% in Q4 since 2013.

Between Past Obituaries and Flawed Predictions: The Great Crypto Theater

In 2017, a certain Evan Faggart listed five reasons why Ethereum was heading straight for disaster: network congestion, lack of use cases, high volatility, community conflicts, and proliferation of scams. At the time, the ETH price was $281.80. Seven years later, it hovers around $3,600, continuing to be one of the pillars of the crypto universe.

Such predictions resurface regularly, fueled by ironic tweets like that of @Jrag0x. He refers to the many times Ethereum has been declared dead. But ETH keeps forging ahead. With its rises, jolts, and critics. It has absorbed skepticism and setbacks but continues to embody, for many, the resilient and inspiring crypto.

Key Figures to Remember:

• 95%: Aave pool utilization rate;
• 49%: ETH increase in one month (~$3,623 at publication);
• 34%: ETH/BTC ratio growth over 30 days;
• +8.19%: average historical Q3 return;
• +22.59%: average historical Q4 return.

Andrew Keys, founder of Ether Machine, asserts that ETH has outperformed Bitcoin over the decade. For him, ether is a winning long-term bet, far outperforming most assets. Though the altcoin is shaken, it remains, for many, a crypto of the future and a pillar of the decentralized ecosystem.