ETH Gas Fees Hit 6-Month Low Signalling Altcoin Rally
The decline in transaction fees comes at a time when ETH has seen a modest price surge
April 29, 2024 07:36 AM
Reading time: 1 minute, 44 seconds
TL;DR Ethereum network's gas fees have hit a six-month low, coinciding with a slight Ether price rally. Analysts from Santiment suggest this could be a precursor to an upcoming altcoin rally. The drop in transaction fees and the recent performance of Ethereum layer-2 networks hint at a changing market sentiment.
Gas Fees Hit Six-Month Low
Crypto analytics firm Santiment reported that Ethereum's gas fees have plunged to a remarkable six-month low, reaching an average of just $1.12 per transaction.
This decline in transaction costs comes when Ether (ETH) has seen a modest price rally, sparking interest and speculation about the potential implications for the broader crypto market.
"Traders historically move between sentimental cycles of feeling that crypto is going 'To the Moon' or feeling that 'It Is Dead,' which can be observed through transaction fees," Santiment noted
The platform elaborated that gas fees tend to spike during local market peaks and fall to lows during market bottoms, suggesting that the current low fees could indicate a market turnaround.
Indicators of a Potential Altcoin Rally
The significant drop in Ethereum's gas fees coincided with a slight uptick in the price of Ether, which gained 4.3% over the last week.
Additionally, Ethereum layer-2 networks such as Optimism (OP), Arbitron (ARB), and Polygon (MATIC) have shown notable performance improvements, ranking among the top five best-performing assets in the top 50 cryptocurrencies by market cap.
Santiment has posited that the current low demand and reduced strain on the Ethereum network could signal the start of an altcoin rally. This is underpinned by the recent increase in Ethereum's circulating supply, with data from ultrasound—money showing a net supply increase of 16,979 new Ether over the last month.
The Merge and Its Aftermath
Notable in this context is Ethereum's transition to a proof-of-stake consensus mechanism, known as 'The Merge,' which took place on September 15, 2022. Since then, more than 437,000 ETH have been burned, contributing to periods of steady deflation. However, the last month has seen a reversal in this trend, with a minor uptick in ETH-based inflation.
This combination of factors—transaction fees, a slight price rally, the performance of layer-2 networks, and the changing dynamics of Ethereum's supply—paints a complex picture of the current state and potential future of the Ethereum network and the broader altcoin market.
These indicators may provide valuable insights into upcoming market movements as the ecosystem evolves.
