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Ethereum still boasts one of the highest transaction volumes in the crypto space but recently, the blockchain has been seeing a decline in its transaction fees. The fees decline significantly which has been a welcome development for users of the network. However, this decline has sparked concerns regarding what types of effects it could have on the price of the digital asset.
Ethereum Fees Fall To 10-Month Low
Ethereum transaction fees have been declining of late. This has been a result of user migration from the network to other smart contract networks. Nevertheless, it remains the leading smart contract platform in the space. Mainly, the decline in transaction fees has been concerning given that it is now the lowest it has been in 10 months. The last time that Ethereum recorded such low transaction volumes was back in July of 2021.
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The network has been experiencing extremely high transaction fees in the last few months, which were triggered by increased activity on the network due to the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs).
ETH price still trending below $2,000 | Source: ETHUSD on TradingView.com
The average fee at the time of this writing sits at $5.05 but on Sunday, it had declined below $3. It is the lowest that transaction fees have been for almost a year. The median fees had also dropped significantly but trading NFTs on OpenSea and carrying out coin swaps on decentralized exchanges still saw high transaction fees.
ETH On The Charts
There are various ways that a decline in transaction fees can affect a cryptocurrency such as Ethereum. The implications are always not an exact science but historical data can help to point a general direction for the price going forward.
One of these historical points in time was back in July 2021 when the ETH fees had fallen below $3. What followed this was a rally that had taken the value of the digital asset from about $1,700 straight through to $4,000 in the next two months.
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Given this, it can be inferred that ETH may be gearing up for a rally. This is supported by the recent recovery trend in the market that has now set the digital asset on a path towards $2,000 once more. This is however predicated on if buyers can comfortably take over the market and push Ethereum back above $2,000.
ETH is trading at $1,904 at the time of this writing. It is up 7.14% in the last 24 hours and remains the second-largest cryptocurrency with a market cap of $230 billion.
Featured image from MARCA, chart from TradingView.com
Disclaimer: The following op-ed represents the views of the author, and may not necessarily reflect the views of Bitcoinist. Bitcoinist is an advocate of creative and financial freedom alike.
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