Last updated on May 3rd, 2024 at 08:17 pm
Gas fees on the Ethereum network have plunged to a six-month low, even as the price of Ether rallied slightly over the weekend, prompting crypto analytics platform Santiment to suggest a potential upcoming altcoin rally.
According to an April 28 post from Santiment, the average fee for an Ethereum transaction dropped to as low as $1.12 on April 27. Meanwhile, within the same period, the native tokens of Ethereum layer-2 networks Optimism, Arbitrum, and Polygon were among the top five best-performing assets in the top 50 cryptocurrencies by market capitalization, with gains of 11.7%, 3.5%, and 2.8%, respectively.
In February, gas fees on Ethereum reached an eight-month high amidst growing interest in an experimental token standard known as ERC-404.
Santiment noted that traders typically oscillate between optimistic and pessimistic sentiment cycles, and it is reflected in transaction fees. The data analytics and research platform explained that fees tend to peak during market tops and decline to “resting state” lows around market bottoms.
“Traders historically move between sentimental cycles of feeling that crypto is going ‘To the Moon’ or feeling that ‘It Is Dead’, which can be observed through transaction fees,”
wrote Santiment.
Santiment’s analysis implies that the current low gas fees could foreshadow a future increase in Ethereum network activity and potentially mark the beginning of an altcoin rally.
Despite recent market retracements, Santiment believes that the reduced demand and network strain could lead to a quicker turnaround for ETH and associated altcoins.
Ether’s price has experienced a modest 4.3% increase over the last week, according to CoinGecko data.
However, the decreased activity on the network has caused the circulating supply of Ethereum to surge to its highest point in the last month. In the last 30 days, 74,458 new ETH were issued, while only 57,516 were burned, resulting in a net supply increase of 16,979 new Ether (ETH), as reported by ultrasound.money.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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