The gas fee on the Ethereum network has dropped to a new low in six months, and blockchain analytics platform Santiment believes this may signal that altcoins could “rebound faster than many expect.”
Santiment, in a post on April 28, pointed out that the average fee for Ethereum transactions dropped to $1.12 on April 27, the lowest point since October last year, and wrote, “Historically, traders tend to hover between emotional cycles of feeling cryptocurrencies are about to ‘To the Moon’ or feeling ‘dead,’ which can be observed through transaction fees.”
Santiment explained that Ethereum network fees often peak in the market at the top (sometimes diverging) and fall to static levels when the price of Ether (ETH) bottoms out. In February this year, during the market frenzy over an experimental token standard called ERC-404, Ethereum’s gas fees reached an eight-month high, while the ETH price hit a cycle high of nearly $4,100 shortly after fees peaked on March 4, followed by a decline. The current ETH trading price is around $3,200.
Santiment believes that low gas fees may signal future growth in Ethereum network activity and herald the beginning of an altcoin rebound. The platform wrote:
“ETH escaped the Bitcoin downtrend over the weekend, with a 7% increase, driving up Ethereum Layer 2 blocks, with OP, ARB, MATIC, and STRK rising by about 12%, 3.5%, 2.8%, and 8.5% respectively over the weekend.”
However, due to a decrease in network activity, ETH’s circulating supply has shown a net increase trend since April 18. According to data from ultra sound money, in the past 30 days, 74,469 ETH have been newly issued, while 57,178 ETH have been burned, contrasting sharply with the continued deflation in the previous five months.