- Ethereum transaction fees fall to 4-month low on chart
- This may be a sign of decreased user activity on the network
According to Santiment's latest update, Ethereum's [ETH] Trading fees fell to their lowest level since January.
Santiment revealed that at the time of writing, the average fee per transaction on proof-of-stake (PoS) networks was $2.34. This is an 84% drop from the year-to-date (year-to-date) high of $15 recorded on March 5th.
💸 #EthereumThe transaction cost on the network was just $2.07, a significant difference from the network cost of $15.21 on March 4, when demand was disproportionately high. Historically, the market has been dominated by the sentiment that cryptocurrencies are heading for the moon and the sentiment that cryptocurrencies are heading for the moon… pic.twitter.com/OKjhmHnYQE
— Santiment (@santimentfeed) April 18, 2024
Decreased network activity
The decline in Ethereum's network fees is due to a decline in user activity on the blockchain over the past month.according to artemis Data shows that Ethereum has seen a decline in daily demand and activity over the past 30 days.
For example, since March 19th, the daily number of unique addresses interacting with Ethereum has increased by 7%. Because of this, the number of unique on-chain interactions with the network has decreased. 1.2 million transactions were completed on Ethereum on April 17th, and the network recorded a 14% decrease in the number of transactions per day over the past 30 days.
The decline in user activity on Ethereum also impacted the performance of the non-fungible token (NFT) and decentralized finance (DeFi) sectors.
When it comes to NFT activity on Ethereum, sales volumes on the network have dropped significantly over the past month.according to crypto slamNFT sales volume on PoS networks totaled $288 million in 30 days, marking a 57% decline.
An indicator of the decline of the network’s DeFi vertical market is the Total Value Locked (TVL).according to Defilama's According to the data, Ethereum's TVL was $49 billion at the time of writing, down 14% from its year-to-date peak of $57 billion.
Due to the decline in Ethereum network activity, the supply of ETH has turned into inflation. This means that the amount of ETH coins created and added to the circulating supply will increase, increasing downward pressure on the altcoin price.
In fact, according to data from ultrasound.moneyThe supply of ETH has increased by over 2,667 ETH in the past week alone.
Reached ETH local top?
In his post, Santiment said the decline in Ethereum’s network fees could signal that the price is nearing a bottom and a rally could be on the horizon. It is important to observe ETH's consumption age indicator to determine if the price has entered the bottom. This metric tracks the movement of previously idle coins.
When a coin's consumption age increases, it suggests that many long-held or idle coins are starting to change hands. This shows that the behavior of long-term holders has changed significantly.
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On the other hand, the decline in ETH's consumption age indicator suggests that long-held coins remain in wallet addresses without being traded.
Since long-term holders rarely move dormant coins, this indicator is a good marker of local highs and troughs. Therefore, every time this happens, there is a significant change in market conditions.
Data from Santiment confirms that the consumption age of ETH rose significantly on April 18th and may have bottomed out.
Source: Santiment
However, a cursory examination of the past few times the coin's consumption age hit similar highs reveals that these episodes were followed by price declines, which reached their highest highs. That was a sign. This may still apply to the world's leading altcoins.
Additionally, current market sentiment remains significantly bearish, with the Bitcoin halving event less than 24 hours away. And what we can read from the coin's price chart suggests that it may already be priced in.
