- Ethereum’s transaction fees drop to $0.41, indicating lower network congestion.
- Low fees could attract new buyers as transaction costs become more affordable.
- Ethereum’s gas limit increase aims to lower fees and support higher transaction volume.
Data from Santiment, an analytic blockchain platform, shows Ethereum’s transaction fees have dropped to $0.41, a huge decrease from the $15.21 high seen over the past two years. The data, shared via their X account, notes that the network generally does not experience heavy congestion when transaction fees are low.
Low Ethereum Fees: A Sign of Buying Opportunity?
Also, low fees often coincide with periods of price stagnation or bearish sentiment, which might mean a possible opportunity for new buyers to enter the market.
These shifts could signal a shift in market dynamics, as low transaction costs usually induce increased network usage. The current fee dip suggests fewer users are interacting with Ethereum frequently or the network’s infrastructure functions more efficiently.
At such times, it is common for market participants to view Ethereum’s price as ‘low,’ creating favorable conditions for new buyers to enter the market without the burden of high transaction costs.
High Ethereum Fees: Sign of Strong Demand, But User Deterrent
However, higher fees are usually linked to a surge in network activity, often associated with price increases. While high fees may indicate strong demand for transactions and Ethereum-based applications, they can also deter users due to the increased network cost.
Related: Vitalik Buterin Outlines Ethereum Future With Layer 2 Advancements
This drop raises the question of whether Ethereum could position itself for another price surge, especially as the market enters a consolidation phase.
Ethereum Boosts Gas Limit to Cut Transaction Costs
Ethereum voters had decided to increase its gas limit to more than 30 million to address transaction costs further. The gas limit limits the maximum amount of computational resources consumed by all transactions within a block.
By raising this limit, Ethereum can process more transactions per block, reducing network congestion and lowering transaction fees as demand for the network rises. Ethereum’s gas limit has already hit 35.9 million in the past 24 hours, implying the network is prepared to accommodate greater activity without driving up fees.
Related: Ethereum Layer 2 Network Base to Break Records with Huge Growth in 2024
Ethereum Technicals Show Mixed Signals
From a technical analysis angle, the MACD shows a bearish outlook for Ethereum, with the MACD line positioned above the signal line. This layout suggests a possible weakening of upward momentum, and the histogram further supports this view with bars below the zero line.
In the meantime, the RSI is approaching oversold territory at 39.72, suggesting a price rebound if Ethereum moves above the 30 mark.
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