What’s behind Ethereum’s wilting transaction fees?
- The average transaction fees on Ethereum fell to its lowest level in 2023.
- ETH continued to move sideways.
The average network fee paid to process transactions on the Ethereum [ETH] network has fallen to its lowest level this year, on-chain data provider Santiment noted in a recent post on X (formerly Twitter).
? #Ethereum network fees have dropped down to its lowest level of 2023, at just $1.15 per transaction. Historically, we see utility begin rising as $ETH becomes more affordable to circulate. Increased utility can then lead to recovering market cap levels. https://t.co/MpOLfMYKUp pic.twitter.com/JI8ZLhmb4p
— Santiment (@santimentfeed) September 23, 2023
How much are 1,10,100 ETHs worth today?
At press time, it cost an average fee of $0.98 to complete a transaction on the Layer 1 (L1) blockchain.
The first half of the year was marked by an uptick in on-chain activity on Ethereum and, as a result, its fees. This was primarily due to the launch of the meme token Pepe [PEPE] on the Ethereum network on 15 April.
PEPE’s value surged by over 6500% within a few weeks of trading, and this drove up transaction fees on Ethereum. By 5 May, this peaked at $14, according to data from Santiment.
However, as the frenzy fizzled out and investors “dumped” their PEPE holdings, user activity on Ethereum took a beating. Since the 5 May high, the median gas fee paid per transaction on the chain has plummeted by 19%.
For context, this stood at 14 GWEI at press time. On 5 May, it was 132 GWEI.
Due to the recent decrease in on-chain activity and the concurrent drop in gas fees, the Ethereum network has entered a phase of inflation. This essentially signifies that new Ether tokens are being generated and introduced into the circulating supply of the network.
As sourced from ultrasound.money, ETH’s supply increased by 6,079 ETH in the past week alone.
ETH continues sideways movement
Still oscillating within a narrow price range, ETH traded at $1,594 at press time. With sentiments among spot traders predominantly bearish, the coin’s Directional Movement Index (DMI) showed that the selling activity outpaced accumulation on a daily chart.
Realistic or not, here’s ETH’s market cap in BTC’s terms
At press time, the sellers’ strength (red) at 28.66 rested above the buyers’ (green) at 12.61. The Average Directional Index (yellow), positioned above 25, confirmed that the trend of ETH distribution among daily traders was strong.
Further, ETH’s Aroon Up Line (blue) has trended downwards since 11 September. At press time, it was pegged at 14.29%. When the Aroon Up line is close to zero, the uptrend is weak, and the most recent high was reached a long time ago.