Ethereum Gas Fees Hit Six-Month Low, Pointing to Potential Altcoin Rise: Santiment

Last updated: April 29, 2024 at 2:40 a.m. EDT | 2 minutes of reading

Gas fees on the Ethereum network saw a significant decline to their lowest levels in six months, although the price of Ether saw a slight rebound over the weekend.

Analysts at crypto analytics platform Santiment suggest that this drop in gas fees could be a signal of an upcoming altcoin rally.

According to Post by Santiment on Xthe average fee for an Ethereum transaction fell to $1.12.

The platform explained that transaction fees often follow cycles of investor sentiment, oscillating between extreme optimism and extreme pessimism.

Gas fees drop during market troughs

Gas costs tend to peak during market highs and then decline to lower levels during market lows.

Earlier this year, gas fees on Ethereum hit an eight-month high in February due to renewed interest in the experimental ERC-404 token standard.

However, the current low gas fees could indicate a potential increase in activity on the Ethereum network, potentially leading to an altcoin rally.

Santiment suggests that the recent market retracement, coupled with reduced demand and pressure on the network, could lead to a faster than expected recovery for Ethereum and related altcoins.

Data from CoinGecko shows that Ether saw a 4.3% gain over the past week, supporting the idea of ​​an uptick in its price.

Additionally, on April 27, three layer 2 Ethereum networks – Optimism (OP), Arbitrum (ARB), and Polygon – were among the top five performing assets among the top 50 cryptocurrencies by market cap, with gains of 11 .7%. 3.5% and 2.8% respectively.

However, the reduction in network activity has led to an increase in the supply of Ethereum in circulation.

Over the past month, 74,458 new ETH were issued, while only 57,516 were burned, resulting in a net supply increase of 16,979 ETH, as reported by ultrason.money data.

This contrasts with the previous five months, which saw constant deflation. It is worth noting that since Ethereum transitioned to a proof-of-stake consensus mechanism, known as “The Merge,” on September 15, 2022, over 437,000 ETH has been burned.

Ethereum records $365 million in Q1 revenue

The Ethereum network reported strong revenue of $365 million in the first quarter of 2024, an impressive year-over-year revenue growth of 155%.

As noted, Ethereum’s Q1 revenue represents a staggering 200% increase from the $123 million profit recorded in Q4 2023.

One of the main factors contributing to this substantial growth was the rise in decentralized finance (DeFi) activity during the quarter, leading to increased participation in the network.

Ethereum’s fee revenue, generated by user transactions, reached a notable milestone of $1.17 billion in the first quarter, a remarkable 155% increase over the same period in 2023 and an increase of 80% compared to the previous quarter.

Amplified network activity, fueled by the rise of DeFi applications, has propelled Ethereum’s average daily transactions in 2024 to surpass last year’s figures.

The current average of 1.15 million daily transactions is very close to the peak levels seen during Ethereum’s memorable 2021 run.

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