Ethereum Gas Fees Plummet to Lowest Point in Six Months, Suggesting Potential Surge in Altcoins: Santiment
By Ruholamin Haqshanas
Updated on April 29, 2024, at 02:40 EDT
Gas fees on the Ethereum network have experienced a significant decrease, reaching their lowest levels in six months, despite a slight rally in the price of Ether over the weekend.
Crypto analytics platform Santiment analysts suggest that this decline in gas fees could be an indication of an upcoming altcoin rally.
According to Santiment’s post on X, the average fee for an Ethereum transaction dropped to as low as $1.12.
The platform explains that transaction fees typically follow cycles of investor sentiment, swinging between extreme optimism and pessimism.
Gas fees tend to reach their peak during market tops and then decrease to lower levels during market bottoms.
Earlier this year, gas fees on Ethereum reached an eight-month high in February due to a surge in interest for the experimental ERC-404 token standard.
However, the current low gas fees could indicate a potential increase in activity on the Ethereum network, which could lead to an altcoin rally.
Santiment suggests that the recent market retracement, combined with reduced demand and strain on the network, may result in a quicker turnaround for Ethereum and associated altcoins than anticipated.
CoinGecko data shows that Ether has gained 4.3% in the past week, supporting the idea of a slight rally in its price.
Additionally, on April 27, three Ethereum layer-2 networks—Optimism (OP), Arbitrum (ARB), and Polygon—were among the top five best-performing assets in the top 50 cryptocurrencies by market cap, with gains of 11.7%, 3.5%, and 2.8%, respectively.
However, the reduced network activity has resulted in an increase in the circulating supply of Ethereum.
Ultrasound.money data reports that over the past month, 74,458 new ETH were issued, while only 57,516 were burned, leading to a net supply increase of 16,979 ETH.
This is in contrast to the previous five months, which saw a steady deflation. It is important to note that since Ethereum’s transition to a proof-of-stake consensus mechanism, known as ‘The Merge,’ on September 15, 2022, more than 437,000 ETH has been burned.
Ethereum Generates $365 Million in Revenue in Q1
The Ethereum network reported a robust income of $365 million in the first quarter of 2024, marking an impressive year-on-year revenue growth of 155%.
Compared to the $123 million profit recorded in Q4 2023, Ethereum’s Q1 income represents a significant increase of 200%.
A major contributing factor to this substantial growth was the surge in decentralized finance (DeFi) activity during the quarter, which drove increased network participation.
Ethereum’s fee revenue, generated through user transactions, reached a noteworthy milestone of $1.17 billion in Q1, marking a remarkable 155% increase from the same period in 2023 and an 80% upswing from the previous quarter.
The heightened network activity, fueled by the surge in DeFi applications, has pushed Ethereum’s average daily transactions in 2024 to surpass last year’s figures.
The current average of 1.15 million daily transactions is close to the peak levels witnessed during Ethereum’s monumental run in 2021.
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