Ethereum Gas Fees Plummet to Lowest Level in Six Months, Pointing Towards Potential Surge in Altcoins: Santiment
By Ruholamin Haqshanas
Published: April 29, 2024, 02:40 EDT
Gas fees on the Ethereum network have experienced a significant decline, reaching their lowest point in the past six months, despite a slight rally in the price of Ether over the weekend.
According to analysts from Santiment, a crypto analytics platform, this drop in gas fees could be an indication of an upcoming rally in altcoins.
Santiment’s recent post on X revealed that the average fee for an Ethereum transaction has dropped as low as $1.12.
The platform explained that transaction fees often follow cycles of investor sentiment, swinging between extreme optimism and pessimism.
Gas fees tend to peak during market tops and then decline during market bottoms.
Earlier this year, gas fees on Ethereum reached an eight-month high in February due to the increased interest in the experimental ERC-404 token standard.
However, the current low gas fees could signal an increase in activity on the Ethereum network, potentially leading to a surge in altcoins.
Santiment suggests that the recent market retracement, coupled with reduced demand and strain on the network, may result in a quicker recovery for Ethereum and associated altcoins than expected.
Data from CoinGecko shows that Ether has gained 4.3% in the past week, supporting the idea of a minor rally in its price.
Furthermore, on April 27, three Ethereum layer-2 networks—Optimism (OP), Arbitrum (ARB), and Polygon—were among the top five best-performing assets in the top 50 cryptocurrencies by market cap, with gains of 11.7%, 3.5%, and 2.8%, respectively.
However, the decrease in network activity has led to an increase in the circulating supply of Ethereum.
In the past month, 74,458 new ETH were issued, while only 57,516 were burned, resulting in a net supply increase of 16,979 ETH, according to data from ultrasound.money.
This is in contrast to the previous five months, which saw a steady deflation. It’s important to note that since Ethereum’s transition to a proof-of-stake consensus mechanism, known as ‘The Merge,’ on September 15, 2022, more than 437,000 ETH has been burned.
In the first quarter of 2024, the Ethereum network reported a robust income of $365 million, representing a staggering year-on-year revenue growth of 155%.
This Q1 income is a significant increase compared to the $123 million profit recorded in Q4 2023.
The surge in decentralized finance (DeFi) activity during the quarter was a major contributing factor to this substantial growth, driving increased network participation.
Ethereum’s fee revenue, generated through user transactions, reached a notable milestone of $1.17 billion in Q1, marking a remarkable 155% increase from the same period in 2023 and an 80% upswing from the previous quarter.
The heightened network activity, fueled by the surge in DeFi applications, has led to Ethereum’s average daily transactions in 2024 surpassing last year’s figures.
The current average of 1.15 million daily transactions is close to the peak levels witnessed during Ethereum’s remarkable run in 2021.
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