Ethereum transaction fees have fallen to record lows, with the average transaction cost currently sitting at just $0.41, compared to a peak of $15.21 over the past two years.
This drop could be an investment opportunity, but it also raises questions about the network’s activity.
The impact of lower fees:
Santiment data suggests that lower transaction fees typically indicate weak activity on the network, with traders viewing prices as low or unattractive.
However, lower fees can be positive in the medium to long term, facilitating new investors’ entry into the market.
When fees are high, this is often associated with increased demand and trading activity, which drives prices higher.
Conversely, very low fees, such as the current levels, can attract users back, bringing the Ethereum network back to life.
Increased withdrawals from exchanges:
Another positive sign is the decline in the available supply of Ethereum on exchanges, with the percentage of tradable ETH falling to just 6.38% of the total supply, the lowest level since the network’s inception.
Although the price of Ethereum has been hovering between $2,600 and $2,800 since the February 3 crash, breaking through $2,800 could mark a major turning point according to many analysts.
Ethereum is also preparing for its next major upgrade called “Pectra,” which comes after the “Merge,” “Chapela,” and “Duncon” upgrades.
Pectra will be the largest upgrade (hard fork) to date, as it includes major improvements such as account abstraction, improved verification, network efficiency, and broader support for layer-2 solutions.
While previous upgrades have been accompanied by significant price movements, CoinMetrics analysis indicates that general market sentiment, whether in the cryptocurrency world or traditional financial markets, will remain the most influential factor in the future of Ethereum’s price.
