Ethereum’s gas fees drop to record low—Here’s how and why?
What's next for ETH price as average transaction fees drop to record lows?
- Ethereum average gas fees have dropped to $0.06.
- Will the low network activity derail ETH’s recovery prospect in the short term?
Ethereum’s [ETH] average gas price has fallen to 1 gwei (about $0.06), marking a record low in 2025.
Gas price is the amount users pay to transact on the Ethereum chain. As such, a fee drop could suggest increased scalability or reduced network usage.
The latter, reduced network usage, appeared more likely to be the reason for the recent decline in base fees on the Ethereum chain.
Notably, after the blobs update in early 2024, the chain saw cheaper transaction costs, especially on the L2 protocols. However, some market pundits have argued that the update also drove most of the L1 demand to L2.
Ethereum network activity declines
For perspective, during the March 2024 peak, when ETH reached $4K, the average base fees spiked to over 90 gwei.
Similar spikes in base fees above 25 gwei have always been observed during ETH rallies and subsequent local tops.
The same trend was repeated in early December (orange spikes) as ETH retested $4K.
However, it’s worth noting that periods of low average gas fees also coincided with reduced active users. During August-October, ETH’s drop and the local bottom were marked by reduced average fees and active daily addresses.
According to CryptoQuant, Ethereum’s average active addresses have dropped from 403K in December to 380K in early February.
But there might be other factors at play, too. ETH’s supply just rose to pre-Merge levels, which could further weigh the altcoin’s market sentiment.
Collectively, these factors could also dent demand. However, the Coinbase Premium Index spiked positively during the recent ETH dump. This indicated that investors jumped on the discount and grabbed more ETH during the deleveraging event on the 3rd of February.
However, the indicator, which tracks U.S. investors’ demand, had eased slightly to a neutral level, at press time.
If the indicator remains green, ETH could attempt to recover and reverse recent losses. But a drop further into red territory could temporarily cap any recovery prospects.
Read Ethereum [ETH] Price Prediction 2025-2025
That said, ETH has been below $3K since the 3rd of February. Whether the U.S. January Jobs report will boost or dent the altcoin’s recovery odds remains to be seen.
