- Ethereum’s record low gas fees have receded to levels unseen for five years.
- Trends show Ether’s price increasing after such cycles.
Ethereum’s gas fees have dipped to record lows, the lowest in five years. Transactions saw users paying gas of 0.6 gwei last week, a stark decrease from March’s 83.1 gwei, when the network witnessed tremendous usage, with the crypto market growing rapidly, marking a decline of about 95%.
Gas fees reducing by this much can mean bullish action for Ether (ETH) soon, trends show. Ethereum’s native asset’s price usually rises after such events. The same can be expected this time, believes Bitget Research’s chief analyst Ryan Lee. “Every time ETH gas fees drop to rock bottom has often signaled a price bottom in the mid-term,” he mentioned. “ETH prices tend to strongly rebound after this cycle, and when this moment coincides with an interest rate cut cycle, the market’s wealth effect is full of possibilities.”
What’s Causing Ethereum’s Receding Gas Fees?
Users have generally shifted to other networks this summer to interact with dapps and trade tokens. The biggest example of this migration is visible on Solana with its pump.fun token generator. Users have launched tremendous amounts of memecoins on it, which others have traded to the maximum extent as the memecoin fever rages on. On certain days, this token generator collected more fees than the entirety of Ethereum.
Developers have also deployed dapps across the Ethereum layer-2 ecosystem as users migrate to these chains for better efficiency and lesser fees. Simultaneously, Ethereum’s Dencun update from March has decreased the network’s gas fees, making data storage from layer-2 networks through blobs. Developers and users on the Ethereum mainchain and its layer-2 ecosystems have reported spending lesser on transaction fees than before the update.
“The drop in Ethereum’s gas fee prices to a five-year low can be attributed to the migration of meme season and Dapp interactions to other faster and cheaper blockchains like Solana and Layer 2, as well as the long-awaited Dencun upgrade that had improved the network efficiency and, therefore, reduced the gas fees,” Lee added.
