Key Points
- Ethereum’s transaction fees have dropped to a four-month low.
- The decrease in fees could indicate a decline in user activity on the Ethereum network.
Ethereum’s transaction fees have reached a low not seen since January, according to updates from Santiment. The average transaction fee on the Proof-of-Stake (PoS) network is currently $2.34. This is an 84% decrease from its peak of $15 in March.
Ethereum’s Network Activity
The decrease in Ethereum’s network fees is a result of reduced user activity on the blockchain over the past month. Data from Artemis shows a decrease in daily demand and activity on Ethereum in the last 30 days.
For instance, the daily count of unique addresses interacting with Ethereum has dropped by 7% since 19 March. This has resulted in fewer on-chain interactions with the network and a 14% drop in daily transaction count in the last 30 days.
Impact on NFT and DeFi Sectors
The decrease in user activity on Ethereum has also affected its non-fungible token (NFT) and decentralized finance (DeFi) sectors. NFT sales volume on the network has dropped significantly over the past month, with a 57% decline reported by CryptoSlam.
The total value locked (TVL) in Ethereum’s DeFi sector has also declined by 14% from its year-to-date peak. This is according to data from DefiLlama.
As a result of the decrease in Ethereum’s network activity, the supply of ETH has become inflationary. This means more ETH coins are being created and added to the circulating supply, putting downward pressure on the altcoin’s price. According to Ultrasound.money, the supply of ETH has increased by over 2,667 ETH in the past week.
Santiment suggests that the decrease in Ethereum’s network fee may indicate that its price is near its bottom and a rally may be imminent. This is based on the observation of ETH’s Age Consumed metric, which tracks the movement of previously idle coins.
A rally in the coin’s Age Consumed suggests that many long-held and idle coins have begun to change hands, indicating a significant shift in the behavior of long-term holders. Conversely, a dip in the metric suggests that long-held coins remain in wallet addresses without being traded.
According to Santiment’s data, ETH’s Age Consumed rose significantly on 18 April, suggesting that a price bottom might be in. However, previous similar highs in the coin’s Age Consumed have been followed by price declines. This suggests that the leading altcoin may yet reach its top.
The current market sentiment remains significantly bearish, with the Bitcoin halving event less than 24 hours away. The coin’s price chart suggests that this event may already be priced in.
