Ethereum’s gas fees have dropped to their lowest levels in five years, sparking hopes for a possible price rebound soon. Ryan Lee, chief analyst at Bitget Research, notes that when Ethereum gas fees fall significantly, it often signals a price bottom for ETH in the mid-term.
Historical trends back up this idea, suggesting Ethereum might be headed for a strong recovery soon. Lee’s data shows that each time gas fees see a sharp decline, ETH prices tend to bounce back.
Ethereum Gas Fees Plunge
Recently, Ethereum’s gas fees—the cost to process transactions on the network—fell to as low as 0.6 gwei, with some low-priority transactions costing 1 gwei or even less. This represents a massive 95% drop from the 83.1 gwei seen in March, during a period of high network activity.
What’s Causing the Drop?
This steep decline is mainly due to less demand for Ethereum’s block space and a shift toward cheaper alternatives like Solana and Layer 2 solutions. These platforms have drawn some activity away from Ethereum, easing pressure on the network.
As fees drop, Ethereum’s supply has increased. Fewer transactions are being processed and burned, resulting in 16,000 ETH—worth around $42 million at current prices—being added to the total supply last week. This contributes to a 0.7% growth in Ethereum’s supply this year.
How the Dencun Upgrade Plays a Role
The sharp drop in fees is also tied to Ethereum’s Dencun upgrade, which made the network more efficient and lowered transaction costs. Additionally, activities like meme coin trading and DApp usage have shifted to other blockchains, further reducing demand on Ethereum.
For example, Solana-based apps like Pump have recently outpaced Ethereum in daily fee generation.
What Does This Mean for Ethereum’s Price?
Ryan Lee believes these low gas fees might signal that ETH prices are nearing a bottom, potentially setting the stage for a recovery. If this trend aligns with interest rate cuts, it could create a wealth effect in the market, further boosting Ethereum’s price potential.
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