According to the latest on-chain observation, gas fees on the ethereum network have dropped to their lowest level in almost two months. How will this affect the price of eth?
ethereum network activity declines ahead of spot ETF
In a new eth-Spot-ETF” target=”_blank” rel=”noopener nofollow”>Quick postA pseudonymous analyst revealed that activity on the ethereum network has been on the decline and gas fees have hit their lowest level in recent weeks. This is despite the upcoming approval and launch of the ethereum spot ETF (exchange-traded fund).
According to data from CryptoQuant, average eth (Gwei) gas fees have dropped to their lowest level since May 2024. As shown in the chart below, the 7-day moving average, which represents the average eth gas price, has been on a downward trend since early June.
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<img decoding="async" class="aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/07/Ethereum-gas-fees-are-at-their-lowest-level-since-May.png" alt="ethereum” width=”1280″ height=”720″ data-recalc-dims=”1″/>
A chart showing the trend of ethereum (eth) average gas fees (Gwei) | Source: eth-Spot-ETF" rel="nofollow noopener" target="_blank">CryptoQuant
Typically, the value of this indicator reflects the level of activity on a particular blockchain (ethereum, in this case). When network traffic becomes saturated due to multiple participants transacting on the network, gas fees tend to experience a sudden spike.
Therefore, the fact that eth average gas fees are at their lowest level in two months only implies that activity on the ethereum network has cooled down over the past few weeks. Naturally, this drop in activity indicates a decrease in investor demand, as most investors may not be too interested in the Ether token at the moment.
Interestingly, the Quicktake analyst noted that gas fee increases tend to coincide with price jumps. It seems that an increase in ethereum prices may be associated with increased network activity, as it seems natural for bullish market sentiment to incentivize more participants to enter the network.
“Could this be the calm before the storm ahead of the upcoming ethereum spot ETF approval?” the analyst added. This implies that the impending launch of the ethereum ETF could prove pivotal for eth’s price action, as the funds’ trading debut could catalyze a surge in network activity.
Ultimately, this could result in a significant upward movement in both average gas fees and the price of eth.
eth price at a glance
At the time of writing, the price of ethereum is hovering around $3,139, reflecting an increase of almost 2% over the past 24 hours. According to data from CoinGecko, the altcoin is up more than 4% over the past seven days.
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The price of Ether faces resistance at the $3,200 level on the daily timeframe | Source: ETHUSDT chart on x/3PbU88yd/" target="_blank" rel="noopener nofollow">TradingView
Featured image from iStock, chart from TradingView
