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Gas Fee Decline on Ethereum Network Sparks Altcoin Rally Speculation
Gas fees on the Ethereum network have recently plummeted to their lowest levels in six months, coinciding with a minor uptick in Ether’s price. Analysts at crypto analytics platform Santiment believe that this drop in gas fees could be an indicator of a potential altcoin rally on the horizon.
Gas Fees and Market Trends
Santiment’s analysis revealed that the average fee for an Ethereum transaction dipped to as low as $1.12, attributing this trend to the cyclical nature of transaction fees that often mirror investor sentiment shifts between extreme optimism and pessimism.
Gas fees typically peak during market highs and decrease during market lows. Earlier this year, Ethereum’s gas fees surged to an eight-month high in February due to heightened interest in the experimental ERC-404 token standard. The current decline in gas fees could signal a resurgence in network activity, potentially paving the way for an altcoin rally.
Market Performance and Network Activity
Recent data from CoinGecko indicates a 4.3% increase in Ether’s value over the past week, supporting the notion of a modest price rally. Furthermore, on April 27, Ethereum layer-2 networks like Optimism (OP), Arbitrum (ARB), and Polygon emerged as top performers among the top 50 cryptocurrencies by market cap, with gains ranging from 2.8% to 11.7%.
However, the reduced network activity has led to a rise in Ethereum’s circulating supply. In the last month, 74,458 new ETH were minted, while only 57,516 were burned, resulting in a net supply increase of 16,979 ETH, as per ultrasound.money data.
Ethereum’s Revenue Growth and DeFi Surge
In the first quarter of 2024, the Ethereum network reported a substantial income of $365 million, marking a remarkable 155% year-on-year revenue growth. This surge was primarily driven by the flourishing decentralized finance (DeFi) sector, which saw heightened network participation.
Ethereum’s fee revenue from user transactions hit a milestone of $1.17 billion in Q1, reflecting a 155% increase from the same period in 2023 and an 80% surge from the previous quarter. The increased network activity, fueled by DeFi applications, has pushed Ethereum’s daily transactions in 2024 to levels close to those seen during the peak of the 2021 bull run.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
