Ethereum Fees Crash to Lowest Level in 5 Years, Here’s the Real Reason

The Ethereum fees have seen its lowest level in five years, reaching $0.168 per transaction. Analytics platform Santiment revealed a massive decline in the Ethereum (ETH) network activity, resulting in the severe dip in the transaction costs.

Despite these low trading activities, the Ethereum price has seen a marginal increase of over 2% over the past 24 hours. Let’s dive deep into the reasons behind Ethereum fees decline and its potential implications on ETH price.

Ethereum Fees Dip To a Five-Month Low: What’s Happening?

According to data revealed by Santiment, a prominent analytics platform, the transaction fees on the Ethereum blockchain have declined to the lowest point in the last five years. Currently, the fee is around $0.168 per transaction. Reportedly, this severe downturn in Ethereum transaction fees could be attributed to the lesser trading activities on the platform.

In an April 17 blog post, Santiment marketing director Brian Quinlivan posited that the number of users on the Ethereum network has significantly decreased. He stated,

When many people are using Ethereum, users bid higher fees to get their transactions confirmed faster This drives the average costs up. When fewer people are transacting, like we see now, users don’t need to bid much. As a result, the average fee drops. It’s essentially a supply and demand system.

How Will the Dip in Transaction Fees Impact ETH Price?

As highlighted by Quinlivan, Ethereum’s low transaction fees might hinder a rebound in the ETH price. However, experts like Merlijn The Trader and Crypto Caesar remain bullish about Ethereum’s future trajectory.

For instance, crypto analyst Merlijn The Trader offered a glimpse into the historical trends of ETH price. If history repeats, now might be the optimal time to accumulate ETH rather than opting for a panic selloff, stated the analyst. Despite the extreme fear in the market, the expert remains hopeful about the crypto’s future trends.

Meanwhile, Crypto Caesar provided a more bullish outlook citing Ethereum’s current critical juncture. Despite the lower Ethereum fees, the analyst remains optimistic about the ETH price as the altcoin is testing key support levels.

ETH’s Current Trend

As of press time, ETH is valued at $1,604, up by 2.59%. Despite a 0.45% surge over the past week, the token has seen a massive decline of 15% over the past month. According to CoinGape’s Ethereum Price Prediction, ETH is poised to hit a maximum limit of $1,593.20.

In contrast to the recent trends that resulted in the lower Ethereum fees, the 24-hour trading volume has increased by 5%, currently at $14.49 billion. This has evoked a positive sentiment, further bolstering the analysts’ bullish predictions.