Gas fees on the Ethereum network have dropped to a six-month low, according to on-chain analytics firm Santiment. This could potentially indicate an upcoming bull market for competing cryptocurrencies.
Santiment tweeted on April 28th that the average cost of Ethereum transactions had plummeted to $1.12. Traders’ sentiment cycles often oscillate between “xxx To the Moon” and “Cryptocurrency is dead,” and this can be observed through on-chain fees.
Santiment explained that on-chain fees typically reach peak levels around market tops and fall to lows in the “resting zone” near market bottoms.
Since February of this year, Ethereum gas fees reached their highest point in eight months due to price increases and the emergence of the new experimental token standard, ERC-404. However, over the past six weeks, the market has mostly been in a retracement phase, and transaction fees have dropped to a low point, suggesting that the reversal of the downtrend for ETH and competing cryptocurrencies may happen sooner than expected.
Santiment noted that on April 27th, the transaction fee for a single Ethereum transaction was $1.12, the lowest since October 18th of last year. At that time, ETH was only $1,563, but it started an uptrend and reached $4,092 on March 12th, accompanied by a surge in on-chain fees.
However, the cooling down of on-chain activity has also led to a surge in the supply of ETH, reaching its highest point in nearly a month. Data shows that in the past 30 days, 74,486 ETH were issued, while only 56,947 were burned, ending a five-month streak of deflation.
Since the Ethereum merge, a total of -437,079.12 ETH has been burned, resulting in a deflation rate of -0.224%.
For further reading: Ethereum liquidations hit a new high in early April, with Aave and Compound experiencing large-scale liquidations. The largest project financing of the year, with Paradigm leading a $225 million investment in the new EVM public chain Monad.