Ethereum 's recent price weakness and sluggish trading activity have led to a sharp decline in mainnet gas fees. According to Dune Analytics data , the median gas bill fell to 0.6 Gwei last week and is now at 1.22 Gwei, a five-year low.
Compared with 83.1 Gwei at the peak of online activity in March, the decline was more than 95%.
Analyst: Ethereum will see a strong rebound
However, according to Ryan Lee, chief analyst at Bitget Research, Ethereum Gas fees hit the lowest level in five years, which is a historically bullish signal for ETH.
Every time ETH's gas fees hit rock bottom, it often heralds a mid-term price bottom. ETH prices tend to rebound strongly after this cycle, and when this moment coincides with a rate cut cycle, the market's wealth effect is full of possibilities.
The main reason for the decrease in gas costs
However, Ryan Lee also further explained that the reduction in demand for the Ethereum network may be related to the Dencun upgrade and cheaper competitors:
Ethereum’s gas fees dropped to their lowest level in five years, which can be attributed to meme season and DApp interactive migration to other faster and cheaper blockchains such as Solana and Layer 2, as well as the long-awaited Dencun upgrade, This upgrade improves network efficiency, thereby reducing gas charges.
And the amount of Ether being burned due to lower fees means that the supply of the token is starting to increase. Data show that the total supply of Ethereum has increased by nearly 16,000 ETH in the past week, driving supply growth this year by 0.7%.
Since gas costs have dropped to the lowest level in five years, it remains to be seen whether gas prices can rise as before.
