Ethereum Gas Fees Hit Five-Year Low: A Bullish Signal for ETH?
Ethereum gas fees have plummeted to levels not seen in the past five years, a development that analysts suggest could signal a bullish trend for the network’s underlying token, Ether (ETH). The decline, observed since March 2024, has seen median gas fees drop below 2 gwei, with recent dips as low as 1.1 gwei, according to data from crypto analytics platform Dune.
Ryan Lee, chief analyst at Bitget Research, noted in a report to CoinDesk that “every time Ethereum gas fees drop to rock bottom has often signaled a price bottom in the mid-term.” He added that ETH prices tend to strongly rebound following these cycles, especially when coinciding with an interest rate cut cycle, creating significant market potential.
Gas, the fee required for performing transactions on the Ethereum network, saw a significant drop earlier this week, with low-priority transactions costing as little as 1 gwei or lower—a rarity in recent years. The current fees represent a more than 95% decrease from the 83.1 gwei levels observed in March, which were driven by a surge in network activity.
This decline in Ethereum gas fees is attributed to multiple factors, including a shift in demand from Ethereum block space to other blockchains such as Solana and Layer 2 solutions, as well as the highly anticipated Dencun upgrade, which has improved network efficiency and significantly reduced transaction costs.
The reduction in gas fees coincides with a bearish trend in Ethereum’s price. ETH is currently trading at $2,560, down 3.3% within 24 hours and 1.75% over the past week, according to CoinMarketCap. On-chain analyst Ali Martinez identified the $2,300 to $2,380 range as a crucial support zone, with data showing that over 90% of addresses that purchased ETH between $2,220 and $3,008 remain in profit.
Despite the recent downturn, the steep drop in gas fees may indicate the start of an altcoin rally, as market conditions and investor sentiment evolve.
