On-chain data shows that ethereum transaction fees are now at their lowest level since October 2023. Here's what it could mean for the cryptocurrency.
ethereum transfer fees have recently plummeted to a low of $1.12
According to data from the on-chain analysis firm twitter.com/santimentfeed/status/1784511938476855337″ target=”_blank” rel=”noopener nofollow”>Holy, the average fee on the ethereum network has fallen to low levels recently. The fee here, naturally, refers to the amount each sender must attach to their transactions as compensation for the blockchain to process their movement.
The fee an investor may have to charge to make the transfer happen quickly depends on the grid conditions at the time. During busy times, there can be a lot of competition to transact quickly, so users who are in a hurry may have to pay high enough fees to overcome this traffic.
Therefore, the average fare tends to be high for the duration of such congestion periods. Likewise, during slow periods, users can get away with paying only a small amount. Due to this relationship, average fees can give an idea of the demand that is present among users to make use of the ethereum network at this time.
The chart below shows how average fees on the ethereum blockchain have changed over the past year:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/Ethereum-Network-Now-Cheaper-in-6-Months-What-It-Means.jpeg" alt="Average ethereum Fees” width=”2773″ height=”1813″/>
The value of the metric seems to have been going down in recent days | Source: twitter.com/santimentfeed/status/1784511938476855337/photo/1" target="_blank" rel="noopener nofollow">Santiment on x
As shown in the chart, the average ethereum fees had seen an increase along with this year's rally and reached a high of $15.21 last month. Interestingly, this spike in fees occurred near the top of the price of the asset itself.
“Historically, traders move between sentimental cycles of feeling like cryptocurrencies are going “to the moon” or feeling like they are “dead,” which can be observed through transaction fees,” the analytics firm notes.
Historically, the market has tended to move against majority expectations, so periods of high rates, when FOMO is taking effect, tend to generate price highs. As such, the pattern observed last month would be in line with what has been observed in the past.
From the chart, you can see that ethereum fees saw a drop along with the price after this high. Recently, the metric has continued this cooldown, now falling to a low of just $1.12.
This is the cheapest price the network has had since October last year. Just as high fees can lead to highs, low demand can result in lows for the cryptocurrency.
“With markets having mostly pulled back over the past 6 weeks, the lack of demand and network strain may help turn the tide for eth and associated altcoins sooner than many might expect,” Santiment explains.
eth price
ethereum had recovered as high as $3,350 yesterday, but the asset appears to have already recovered this rise as it is now down to just $3,170.
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Looks like the price of the coin has gone through a rollercoaster over the past couple of days | Source: ETHUSD on TradingView
Featured image by Kanchanara on Unsplash.com, Santiment.net, TradingView.com chart
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