On-chain data shows the cost of making a transfer on the Ethereum network has plunged recently. Here’s what this could mean for the ETH price.
Ethereum Average Fees Has Gone Down Recently
In a new post on X, the on-chain analytics firm Santiment has discussed about the latest trend in the Average Fees of Ethereum. The “Average Fees” here refers to an indicator that keeps track of the average amount of fees (in USD) that users on the ETH network are attaching with their transactions.
This indicator’s value tends to be directly related to the activity that’s occurring on the network. When there is a high amount of traffic, the Average Fees can note an uptick.
This is because the blockchain only has a limited capacity to handle transactions, so the validators prefer to process the transfers with the highest fees first. Users that don’t want to be stuck waiting in the mempool have no choice, but to pay a transfer fees that’s higher than the average.
As senders compete against each other in this manner, the Average Fees can shoot up during a period of congestion. In times of little network activity, though, the metric can stay at low levels, as investors have no incentive to pay a high fee.
Now, here is the chart shared by the analytics firm, that shows the trend in the Ethereum Average Fees over the last couple of years:
As displayed in the above graph, the Ethereum Average Fees has been in a state of decline recently, which implies the activity on the network has potentially been going down.
Today, the metric is sitting at just $0.4088, which is the lowest that it has been since late August. While a high amount of activity is constructive during uptrends (since all of the users making trades is what provides the fuel to keep such moves going), low network fees may not be so bad while the market is already down.
As Santiment explains,
When users are not paying high prices to move their ETH or tokens, it is typically a good sign for mid-term and long-term price outlooks. These low fee levels often happen when prices are perceived as ‘low’ or ‘bearish’ according to traders. These reduced costs make it easier for new buyers to enter the market.
It now remains to be seen whether this low Average Fees period would lead to a fresh rebound for Ethereum, just like it did following the aforementioned low in August.
ETH Price
Ethereum has been locked in sideways movement since the crash around the start of the month as its price continues to trade around $2,700.
Featured image from Dall-E, Santiment.net, chart from TradingView.com
Keshav Verma
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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