On-chain data shows that Ethereum transaction fees have fallen to their lowest levels recently over the years. This is what ETH prices mean.
Currently, the average price for Ethereum is valued at just $0.168
In a new insight post, on-chain analytics firm Santiment discussed the latest trends in average prices at Ethereum. “Average Fee” is a metric that tracks the average fees that senders on the ETH network attach to transactions, as its name suggests.
The value of this indicator is directly correlated with the amount of traffic handled by the blockchain. The reason behind this lies in the fact that the network has limited ability to handle the transfers.
When the chain is busy, the transfer can continue to wait until the previous transaction is resolved. Those who want to process the transaction as quickly as possible may choose to attach above average fees.
Competition between users of this type can quickly drive average rates to a significant level, especially when there is heavy traffic. However, if there is little activity, the metric value may remain low as senders have little incentive to pay a noticeable amount of fees.
With average fees dropping, it appears that Ethereum has recently witnessed the latter type of condition.
Looks like the value of the metric has declined to a low level in recent days | Source: Santiment
As shown in the graph above, the average price for Ethereum has recently fallen to a low of $0.168, the lowest since 2020. This means that activity on the network is historically low at this point.
According to the analytics company, this may not be so bad in terms of transactional terms. This is because low rate periods often precede the price rebound of cryptocurrency.
Below is a chart showing an example of this trend.
The past trend in the transaction fees of ETH | Source: Santiment
As seen in the graph above, the average price for Ethereum, which falls under the $1 mark in 2023, has provided bullish momentum for the assets. The explanation behind this pattern may lie in the fact that low-cost periods can indicate crowd indifference.
Historically, ETH and other digital assets have tended to move against the expectations of the majority. This means that a lack of optimism could lead to rebounds, but excessive hype could lead to top. The charts show that ETH’s first quarter top in 2024 was metrics above $15, indicating an overexcitation.
“In general, fee levels below a dollar are quite promising signs of crowds becoming indifferent,” the analytics company said. “Remember, whenever a fee cost below or above a certain level is infringed, there is no “bottom” or “top” level where the set is guaranteed. ”
ETH Price
At the time of writing, Ethereum has grown by more than 1% over the last 24 hours.
Looks like the price of the asset hasn't moved much recently | Source: ETHUSDT on TradingView
Featured images from charts on Dall-E, santiment.net, and tradingview.com
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