Expensive network fees have always been the biggest obstacle that has plagued Ethereum, and the biggest factor that has led to the rise of other competing chains (especially Solana). Although Ethereum has undergone several major upgrades (Shanghai Upgrade, Cancun Upgrade), the problem of high gas fees on the Ethereum mainnet has not been significantly reversed.
But a strange phenomenon has emerged in recent days. In the past 7 days, Ethereum (ETH) has become the best performing cryptocurrency among the top 10 cryptocurrencies by market value. Yesterday, ETH rose by more than 5% in a single day, breaking through $3,300, leading the rise of mainstream currencies. However, the gas fee of the Ethereum network hit a new low in nearly 6 months, with the base fee reduced to 4 gwei (about $0.27).
On-chain metrics analysis firm Santiment said Ethereum’s average fee level has dropped to its lowest daily level since October 18.
Historically, traders have oscillated between sentiment cycles of feeling like #crypto is about to "go to the moon" or feeling like "it's dead," which can be observed through transaction fees. These fees tend to peak near price tops (sometimes diverging) and return to rest near price bottoms.
Nonetheless, Santiment predicts that current gas prices could be attractive to traders, pushing the market out of its current stagnation. This development could help Ethereum and Altcoin rise again.
Gas fees fall, ETH circulating supply increases
Data from Ultrasound Money shows that Ethereum's circulating supply has surged in the past few days, climbing to its highest level since March 14. Since April 14, Ethereum's supply has increased by 15,230 ETH ($47.8 million), and the current number of ETH in circulation is 12,078,565.7 ETH.
The sharp increase in Ethereum supply is the result of a continued low destruction rate and frequent transaction fees over the past two weeks. The current weekly inflation rate is equivalent to 0.425% per year.
The resurgence of ETH inflation comes after Ethereum experienced five months of steady deflation, with its supply decreasing by 204,350.5 ETH ($641.6 million) from October 30 to an all-time low of 120,063,127 on April 4.
This trend comes despite on-chain activity within the wider Ethereum ecosystem hitting all-time highs in both active wallets and transaction volume.
While strong adoption of the Base and Polygon Layer 2 networks was the primary force behind the milestone, Ethereum’s average daily throughput has remained above 13 transactions per second (TPS) in recent weeks, exceeding its throughput for most of 2023.
Is the low gas fee a signal to buy the dips?
In fact, there has always been an investment view in the crypto that "buy the dips at the bottom when the gas fee is low, and sell when the gas fee is high". When the gas fee is at a low level, it becomes a bottom signal. At the same time, the lower gas fee will actually increase user activity, and many users will choose this time to complete some on-chain interactive operations. For some Ethereum ecosystem users, this is a good time to interact.
